ADVERTISEMENT

FinTech Tracker: Can Sentifi’s Stock Sentiment Indicator Help Investors?

Can Switzerland based fintech firm Sentifi help investors tune in to the right chatter?

Men look up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange (BSE) in Mumbai. Photographer: Dhiraj Singh/Bloomberg.
Men look up at an electronic ticker board that indicates stock figures at the Bombay Stock Exchange (BSE) in Mumbai. Photographer: Dhiraj Singh/Bloomberg.

There is a deluge of data out there. Information. Analysis. Opinions.

For an investor to keep track of all the bits of news available, and to sift through it to see if any of the information is relevant to his or her investment decisions, is no mean feat.

Switzerland based fintech firm Sentifi says it has a solution to help investors in this information super-age. Its machines will go through millions of data pieces to tell you which companies are being discussed the most and the topics around which discussions are centered. All an investor has to then do is to access the Sentifi information module to see if their investments are part of the chatter and why.

On March 16, Sentifi partnered with the Bombay Stock Exchange (BSE) and started publishing social media analysis of conversations around Indian stocks on the exchange’s homepage. BSE, which has about 5,500 listed companies, now provides real time information on the companies most frequently discussed in the news and on social media.

For instance, as technology major Infosys released its quarterly results on Thursday, it was at the top of the list on the Sentifi module, which also listed major topics of conversation. These ranged from the company’s financial results to changes announced in the company’s board composition. For an investor, this provides a snapshot of what is happening with their investee company.

“The primary objective is to filter out the noise and get the most relevant messages to the investors / readers. This collaboration will be a one stop solution for accessing all companies’ information reporting social media updates,” said Ashishkumar Chauhan, managing director and chief executive officer of BSE in a media statement in March 2017 when the tie-up between the exchange and Sentifi was announced.

A screenshot of Sentifi panel from the BSE India website. 
A screenshot of Sentifi panel from the BSE India website. 

Sentifi claims that its dashboards provide both retail and institutional investors with a clear insight into what people are talking about. It adds that this could be a way to preempt opportunities and risks.

Speaking to BloombergQuint on the phone, Sentifi’s founder and chief executive officer Anders Bally said that his company tracks more than 40,000 firms around the world and it intends to expand its presence in India where social media is booming.

“India is a big opportunity for us as people love social media here and there’s a lot of appetite for analysis based on that. There is a lot of interaction around news in India as compared to other countries,” Bally said.

The company, founded in 2012, is Bally’s seventh venture. He believes the model followed by Sentifi is scalable and the analysis gathered through algorithms can be sold to multiple entities across the world at no incremental cost.

The problem is that all analysis is based on things that have happened. Earnings come out only once a quarter so that information gets priced in really quickly. This approach of analysing real time data can help us see the current sentiment in the market. We can see what people are thinking about before they push the button to buy/sell something.
Anders Bally, Founder and CEO, Sentifi
FinTech Tracker: Can Sentifi’s Stock Sentiment Indicator Help Investors?

The company has a database of over 60 lakh sources which includes newspapers, blogs, websites and verified social media users. The algorithm used by Sentifi assigns each news sources a ranking based on its credibility and also has filters to weed out fake news and promoted stories.

“We are ranking our sources so we can pick which one we want to listen to,” said Bally.

Sentifi’s widgets get around 70 million page views each month across the different platforms, according to Bally. Among its subscribers are large funds, banks, financial institutions as well as major business newspapers which are on the lookout for stories. In India, Sentifi is live on market news website moneycontrol.com and brokerage website indiaonline.in. Other partnerships are in the works, Bally said without sharing details.

The company plans to develop its product further in the next two three years to reach individual investors as well. This will allow investors to subscribe to the service and track the chatter around their portfolio stocks in real time.

“Eventually, we want to have a special set-up for investors to crowd-monitor their assets. They can use these tools to discover things they can’t find in the newspapers,” Bally said.

Will investors really find this information useful? Or will it just add to the noise?

Saurabh Mukherjea, chief executive officer of Ambit Capital told BloombergQuint that none of the big data or artificial intelligence firms, which are trying to make financial markets efficient, have proven their mettle yet.

The use of social media in a way which lends any credibility to the prediction is confined to the urban elite in India. We are a very ill-liquid stock market. In fact we are the least liquid among the world’s top 10 stock markets. So ephemeral analysis based on sentiment may not have any impact. In super liquid markets like America, this data might have some worth. But if you believe you can trade in and out of stocks, using social media data and big data, then you have another thing coming.
Saurabh Mukherjea, Chief Executive Officer, Ambit Capital

He, however, added that it could prove beneficial for brokerages or exchanges like BSE as activity around a stock could entice first time investors to the markets and help push up volumes.

This report is part of a series profiling fintech firms changing the way financial services operates in the India. The series will play out every weekend on Bloombergquint.com