An Analysis of the Performance of Artificial Neural Network Technique for Stock Market Forecasting

In this paper, we showed a method to forecast the daily stock price using neural networks and the result of the Neural Network forecast is compared with the Statistical forecasting result. Stock price prediction is one of the emerging field in neural network forecasting area. This paper also presents the Neural Networks ability to forecast the daily Stock Market Prices. Stock market prediction is very difficult since it depends on several known and unknown factors while the Artificial Neural Network is a popular technique for the stock market Forecasting. The Neural Network is based on the concept of ‘Learn by Example’. In this paper, Neural Networks and Statistical techniques are employed to model and forecast the daily stock market prices and then the results of these two models are compared. The forecasting ability of these two models is accessed using MAPE, MSE and RMSE. The results show that Neural Networks, when trained with sufficient data, proper inputs and with proper architecture, can predict the stock market prices very well. Statistical technique though well built but their forecasting ability is reduced as the series become complex. Therefore, Neural Networks can be used as an better alternative technique for forecasting the daily stock market prices. KeywordsForeign Investors Inflow, Mean Square Error, Sum of Square Error, Mean Absolute Error, Root Mean Squared Error, Wholesale Price Index, Money Supply Broad Money, Money Supply Narrow Money, Exchange Rate, Industrial Production.