An Examination of Herding Behavior in an Emerging Economy a A Study of Indian Stock Market

Ashish Kumar; Bharti; Sanchita Bansal

An Examination of Herding Behavior in an Emerging Economy – A Study of Indian Stock Market

Ms Bharti * §

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Dr. Ashish Kumar

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Dr. Sanchita Bansal

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§ Guru Gobind Singh Indraprastha University

An Examination of Herding Behavior in an Emerging Economy – A Study of Indian Stock Market

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Abstract

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. The study has practical implications as the consideration of herding factor is very important for the correct valuation of stocks resulting in rational investment decision making. The present piece of research contributes to the body of knowledge by assessing the herding behavior in the emerging economy that of India as most of the prior studies have been carried out in developed markets.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

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How to Cite This Article

Ms Bharti, Dr. Ashish Kumar, Dr. Sanchita Bansal. 2016. "An Examination of Herding Behavior in an Emerging Economy – A Study of Indian Stock Market". Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 16 (GJMBR Volume 16 Issue 25 (B5)).

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GJMBR Volume 16 Issue 25 (B5)

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

cross sectional absolute deviation emerging market herd behavior indian stock market investors

Classification

GJMBR-B Classification JEL Code: E29

Submission ReceivedDecember 7, 2015
Peer Review Double Blind
Handling Editor
Accepted December 31, 2015
Published July 29, 2016

Version of record

v1.2

Issue date

July 29, 2016

Language

English

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Article Matrices

Total Score: 113

Country: India

Subject: Global Journal of Management and Business Research - B: Economic & Commerce

Authors: Dr. Ashish Kumar, Ms Bharti, Dr. Sanchita Bansal (PhD/Dr. count: 2)

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