An Examination of Herding Behavior in an Emerging Economy a A Study of Indian Stock Market
The present study makes an attempt to examine the presence of herding in Indian stock market amongst the investors, using the daily closing price of NSE’s benchmark index Nifty and thirty six companies forming part of it for a period commencing from January 1, 2008 to December 31, 2015. It explores the likely consequences of different levels of herding in Indian stock market. The study employs the methodology suggested by Chang et al. (2000) of cross sectional absolute deviation (CSAD) to test herd formation. The results of the study do not provide any evidence of herding in the Indian security market during the chosen period. The study further denies the evidence of herding during bull and bear phases of markets and also during the extreme market conditions. These results indicate that Indian security market investors tend to take investment decisions of their own and do not indulge in any herd tendency and imitate the investment behavior of other fellow investors.
