INTRODUCTION

Stock market prediction has been a widely studied area due to its critical role in financial
decision-making. Accurate forecasting of stock prices can provide investors with valuable
insights, aiding in risk management and strategic planning. However, stock price movements are
highly volatile, influenced by numerous economic, political, and market factors. Traditional
statistical models such as Autoregressive Integrated Moving Average (ARIMA) have been
widely used for time-series forecasting, but they often fail to capture complex dependencies in
financial data. With advancements in deep learning, models like Gated Recurrent Units (GRU)
have emerged as effective tools for learning sequential patterns, enabling improved predictive
performance.

Despite significant progress, challenges remain in achieving high accuracy and robustness in
stock price prediction. Many existing models either rely solely on statistical techniques, which
may not capture non-linearity, or deep learning approaches, which can overfit on limited
financial datasets. Additionally, stock price prediction models often lack comprehensive risk
analysis, making them less reliable for real-world investment decisions. To address these
limitations, this research integrates ARIMA and GRU into a hybrid framework, leveraging the
strengths of both methodologies to enhance prediction accuracy while incorporating risk
assessment metrics to improve decision-making.

This study aims to develop an efficient hybrid stock price prediction model that combines
ARIMA for capturing short-term linear trends and GRU for learning complex, long-term
dependencies in stock price movements. Additionally, Value at Risk (VaR) and Conditional
Value at Risk (CVaR) are incorporated to evaluate financial risk, ensuring a more
comprehensive market analysis. By implementing this approach, the research seeks to bridge the
gap between statistical forecasting and deep learning-driven predictions while providing a risk-
aware investment strategy.

The proposed methodology involves collecting historical NIFTY 50 stock data from sources
such as Yahoo Finance and NSE API, preprocessing it for missing values and feature
engineering, and then applying multiple predictive models, including LSTM and XGBoost, for
comparative analysis. The model performance is evaluated using key metrics such as Root Mean
Squared Error (RMSE) and Mean Absolute Error (MAE). Furthermore, a Flask-based web
interface is developed to enable real-time accessibility for traders, investors, and analysts,
ensuring practical applicability of the research findings.

This study contributes to the growing field of financial time-series forecasting by presenting a
hybrid predictive framework that integrates risk analysis into stock price modeling. The findings
provide deeper insights into the effectiveness of combining statistical and deep learning
models for stock prediction and underscore the importance of incorporating risk assessment
techniques to support more informed financial decision-making.
 LITERATURE SURVEY

1. The paper "Enhanced prediction of stock markets using a novel deep learning model PLSTM-
TAL in urbanized smart cities" presents a deep learning-based approach for stock market
prediction. This study introduces the PLSTM-TAL model, combining Peephole LSTM with a
temporal attention layer for stock market prediction. Using daily data from major indices (S&P
500, FTSE, SSE Composite, and Nifty 50) from 2005 to 2022, the model is enhanced with
preprocessing techniques like Contractive Autoencoder (CAE) and Ensemble Empirical Mode
Decomposition (EEMD). PLSTM-TAL outperforms benchmark models such as CNN, LSTM,
SVM, and Random Forest, achieving the highest accuracy of 96% for the FTSE index. The
results suggest that the UK and Chinese markets are more predictable than the US and Indian
markets. The study highlights the importance of combining advanced techniques to improve
stock market forecasting.

2. The paper "Applying machine learning algorithms to predict the stock price trend in the stock
market – The case of Vietnam" explores the use of machine learning techniques for stock price
prediction in the Vietnamese market. The authors apply models such as Decision Trees, Support
Vector Machines (SVM), Random Forest, and Neural Networks to predict stock price trends.
The dataset used in the study comprises historical stock prices from the Vietnamese stock
market, particularly from the Ho Chi Minh Stock Index (HOSE), alongside other market
indicators. The research compares the performance of these models based on accuracy, with
results indicating that machine learning algorithms can significantly enhance prediction
accuracy. The study highlights the potential of these methods to aid investors and decision-
makers in the dynamic stock market of Vietnam.

3. The paper "Predicting Economic Trends and Stock Market Prices with Deep Learning and
Advanced Machine Learning Techniques" investigates the application of deep learning and
advanced machine learning models for predicting economic trends and stock market prices. The
authors utilize models such as Deep Neural Networks (DNN), Long Short-Term Memory
(LSTM), and XGBoost to forecast stock prices and economic indicators. The study uses datasets
that include historical stock market data from various global stock exchanges.The paper
compares the performance of these models in terms of prediction accuracy, demonstrating that
deep learning and machine learning techniques can significantly enhance economic forecasting.
The results emphasize the potential of these models in financial decision-making and economic
trend analysis.

4. The paper "Implications of Deep Learning for Stock Market Forecasting" explores the use of
deep learning techniques in stock market prediction. The authors focus on models such as Long
Short-Term Memory (LSTM), Convolutional Neural Networks (CNN), and a combination of
these with traditional machine learning models like Support Vector Machines (SVM) and
Decision Trees. They analyze historical stock price data from the Indonesian stock market,
particularly from the Indonesia Stock Exchange (IDX). The study demonstrates that deep
learning methods, especially LSTM, outperform traditional machine learning models in terms of
prediction accuracy. The findings emphasize the growing potential of deep learning for
enhancing stock market forecasting, especially in emerging markets like Indonesia.
5.Comparative Analysis of Deep Learning Models for Stock Price Prediction in the Indian
Market

This research compares deep learning models (RNN, LSTM, CNN, GRU, Attention LSTM) for
predicting stock prices of major Indian companies (HDFC, TCS, ICICI, Reliance, Nifty 50). The
study uses metrics like MAE, MSE, and R-squared to evaluate model performance. Results
indicate CNN and GRU models generally outperform others, demonstrating superior forecasting
capabilities depending on the stock. The research aims to provide insights into the strengths and
limitations of each model. The models were trained on data from January 2016 to December
2020, and tested on data from January 2021 to December 2021.

6. Analysis of Sectoral Profitability of the Indian Stock Market Using an LSTM Regression
Model

This paper explores an optimized LSTM model for predicting stock prices in the Indian NSE
market, using historical data from 70 stocks across seven sectors (2010-2021). The model
extracts stock prices, makes buy/sell recommendations, and computes sector profitability.
Results show the model's high accuracy in predicting future prices and identifies profitable
sectors. The study offers insights into portfolio design and sector-specific investment
opportunities using LSTM-based predictions. The LSTM model uses 50 days of past data and
features like open, high, low, close and volume to predict the close price for the next day.

7.Enhancing stock market prediction accuracy with recurrent deep learning models: A

case study on the CAC40 index

This paper explores an optimized LSTM model for predicting stock prices in the Indian NSE
market, using historical data from 70 stocks across seven sectors (2010-2021). The model
extracts stock prices, makes buy/sell recommendations, and computes sector profitability.
Results show the model's high accuracy in predicting future prices and identifies profitable
sectors. The study offers insights into portfolio design and sector-specific investment
opportunities using LSTM-based predictions. The LSTM model uses 50 days of past data and
features like open, high, low, close and volume to predict the close price for the next day.

8.The study employs several advanced deep learning models to forecast stock prices, including
Long Short-Term Memory (LSTM) networks, Gated Recurrent Units (GRU), and a hybrid
Convolutional Neural Network–Long Short-Term Memory (CNN-LSTM) architecture. These
methods are compared against traditional forecasting techniques such as the ARIMA model to
establish a performance baseline. The authors utilize historical stock price data, primarily
sourced from publicly available financial repositories like Yahoo Finance, which provide
comprehensive daily stock price records for selected companies and indices. Data preprocessing
steps such as normalization and stationarity adjustments are applied to the raw data to enhance
model training and accuracy. This multifaceted approach allows the study to capture the
complex, non-linear temporal dependencies inherent in financial time series. Overall, the
combination of these methods and datasets demonstrates the potential of deep learning
techniques in achieving more precise stock price predictions.

9. Financial market prediction has traditionally relied on models like the Efficient Market Hypothesis
(EMH), but behavioral finance and the Adaptive Market Hypothesis (AMH) highlight the influence of
emotions and external factors. Social media, particularly Twitter, has emerged as a key source of real-
time investor sentiment, impacting stock movements. While deep learning (DL) improves financial
forecasting by handling complex patterns, its lack of interpretability remains a challenge. Existing studies
often focus on either market data or sentiment data, failing to integrate them effectively. Traditional
methods like the Granger causality test struggle with financial markets’ non-linear dependencies, while
machine learning models, despite their accuracy, suffer from a black-box nature. Explainable AI (XAI)
techniques such as LIME and SHAP address this issue by clarifying model predictions. However, gaps
remain in integrating market data with Twitter sentiment and analyzing tweet engagements’ impact. To
bridge these gaps, this study proposes a novel feature matrix combining sentiment data, market OHLC
(Open, High, Low, Close) data, and engagement metrics. By applying LIME, the model improves accuracy
and transparency, enhancing trust and usability for traders and investors.

10. Predicting stock prices is notoriously difficult due to the volatile and unpredictable nature of
financial markets. This research takes an innovative approach by combining machine learning
models with human intelligence, specifically by leveraging insights from "Superforecasters"—
individuals known for making highly accurate predictions. The study employs five machine
learning models, including Bidirectional LSTM, ARIMA, CNN-LSTM, GRU, and a hybrid
LSTM-GRU model, to analyze stock price movements. The accuracy of these models is
measured using Mean Absolute Error (MAE). In addition to these AI-driven models, the study
integrates human expertise by developing a user-friendly platform where individuals can submit
stock price predictions. Over time, users with consistently accurate forecasts are identified as
"Superforecasters," whose insights are then incorporated into the machine learning models to
enhance predictive accuracy. The study acknowledges challenges such as data availability,
model reliability, and the need for real-time analysis. Nevertheless, by fusing machine learning
with human intelligence, this research presents a unique and promising approach to stock market
forecasting, ultimately aiming to bridge the information gap for investors and improve decision-
making in the Indian financial market

11. Stock market movements are inherently complex and influenced by numerous external and
internal factors such as political events, economic policies, and company performance. This
unpredictability has led financial analysts to explore advanced techniques like deep learning to
enhance prediction accuracy. Deep learning, particularly models like Long Short-Term Memory
(LSTM) and CNN-LSTM architectures, has demonstrated impressive capabilities in recognizing
intricate patterns in stock market data, outperforming traditional statistical methods. The
advantage of these models lies in their ability to process large volumes of data, adapt over time,
and uncover non-linear relationships that conventional models might miss. Despite their promise,
deep learning models are not without limitations—challenges such as data quality, model
interpretability, and overfitting remain areas of concern. Research suggests that integrating deep
learning with traditional financial models and implementing risk management strategies can
optimize their predictive power. Furthermore, continuous evaluation of these models is essential
to ensure they adapt to ever-changing market dynamics. By embracing these advancements,
investors and financial analysts can make more informed decisions, improving market efficiency
and investment returns.

12. Stock market trend prediction has long been a challenging yet crucial task for investors,
governments, and financial institutions. Traditional forecasting methods, such as logistic
regression and support vector machines (SVM), have been widely used, but they often struggle
with capturing the complexity and non-linear nature of financial markets. While some studies
focus on predicting stock prices, fewer have explored multi-class trend classification, an essential
aspect of financial decision-making. Recent advancements in artificial intelligence (AI) and deep
learning (DL) have shown promise in handling large datasets and identifying complex patterns,
yet many existing models are limited to binary classification or lack interpretability. To bridge
this gap, researchers have begun integrating Explainable AI (XAI) techniques, such as SHAP
and LIME, to enhance model transparency and provide insights into prediction rationale. Unlike
conventional models, deep neural networks (DNNs) offer superior performance by leveraging
feature engineering and sophisticated architectures that account for market dynamics. However,
challenges such as overfitting, dataset constraints, and market volatility remain key concerns.
Addressing these issues, the proposed DNN-based approach in this study surpasses benchmark
models, demonstrating higher accuracy and robustness across multiple real-world stock indices,
including S&P 500, DAX30, Nikkei 225, and FTSE 100. By incorporating XAI, the model not
only achieves superior predictive power but also provides financial stakeholders with a clearer
understanding of the key factors driving market trends, ultimately enhancing decision-making
and risk management strategies.

13. This systematic review involves the application of DL models within the stock market using
technical analysis. It comprises 34 papers from 2017 to 2020; the results outline the dominance
by LSTM networks as 73.5% along with hybrid CNN models. Mostly, the reviewed studies were
simplistic trading strategies focusing on limited profits and risk assessments. Only 35.3% of
those reviewed evaluated profits, and the same percentage concerning risk management
contained only two assessments. Hybrid models, adaptive trading strategies, and real-world
validation are some of the key gaps. Although LSTM is promising, profitability assessment and
risk management in future research are required for practical implementation in the market.

14. This study probes the impact of stock price changes on the Indian retail investor investment
behavior during the COVID-19 pandemic, which has been explored with data sourced from 200
individual investors and the BSE SENSEX index from January to August 2020. Three different
phases of the market—Bearish Trend, Bullish Reversal, and Bullish Uptrend Consolidation—are
noted and have distinct effects on investors' decisions. It revealed that an investor will use both
fundamental and technical analysis when choosing investments. The fundamental analysts buy
stocks during price falls because the undervaluation is exploited. In contrast, technical analysts
favor rather significant trend reversals and momentum indicators, ensuring the right timing of
their investments. The study was definitely accurate in confirming that stock price movements do
indeed affect the investment strategies. Thus, market phases indicate the significant need to
understand them. By recognizing these patterns, investors can make more informed decisions,
optimizing their investment strategies for better financial outcomes.

15. In the document attached herewith, literature survey has been discussed about applying deep
learning techniques in predicting the stock market and making investment decisions within the
financial management domain. Traditional statistical models fail to execute handling of nonlinear
relationships and also temporal dependencies in finance data, thereby necessitating the adoption
of deep learning approaches. The paper integrates CNN for feature extraction, BiLSTM for
capturing sequential dependencies, and an attention mechanism to focus on relevant data points.
It has discussed existing deep learning methodologies like RNN, LSTM, and Transformer
models with their strengths and weaknesses. Reinforcement learning and ensemble learning are
also considered as alternative approaches. The hybrid model put forth in this research shows
great precision and potency in financial decisions in comparison with conventional approaches.
It is beneficial as empirical support to the applications of AI techniques in finance while
underscoring deep learning and its applicability to stock market analysis.

16. This paper addresses the question of how deep learning (DL) models work to predict stock
market trends for two stock exchanges: the National Stock Exchange (NSE) of India and the
New York Stock Exchange (NYSE). It compares four popular DL models—Multilayer
Perceptron (MLP), Recurrent Neural Network (RNN), Long Short-Term Memory (LSTM), and
Convolutional Neural Network (CNN)—with the traditional Autoregressive Integrated Moving
Average (ARIMA) model. Among these, the CNN is established as the strongest model that
returns the lowest value of Mean Absolute Percentage Error, and shows itself to be capturing
subtle, nonlinear patterns in time series data corresponding to stock prices. Moreover, the
research draws attention to DL models that had been trained in NSE with Tata Motors shares
successfully predict stocks of NYSE companies such as Bank of America and Chesapeake
Energy, leading to an underlying dynamics shared among the two. Another major finding is that
a 200-day window size yields the best accuracy in making 10-day stock price forecasts, further
affirming the power of DL models in handling financial time-series data. In summary, the
research underlines the superiority of deep learning techniques over traditional linear models
such as ARIMA and, thus, shows promise in boosting the accuracy of stock market prediction in
various financial markets.