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Herding Behavior in an Emerging Stock Market: Empirical Evidence from India

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  • Ashish Garg
  • Kiran Jindal

Abstract

This paper is an attempt to examine the presence of herd behavior in the stock market of India, which is one of the emerging economies of the world. The study uses the measures suggested by Christie and Huang (1995) and Chang et al. (2000) on National Stock Exchange data. Empirical results based on daily and monthly data indicate that during periods of extreme price movements, equity return dispersions tend to increase rather than decrease, thus providing evidence against the presence of herding in the Indian stock market for the years 2000-2012. Owing to reforms in Indian stock market and the increased presence of institutional players, investors’ behavior seems to be more rational, facilitating the application of rational pricing models in the Indian stock markets.

Suggested Citation

  • Ashish Garg & Kiran Jindal, 2014. "Herding Behavior in an Emerging Stock Market: Empirical Evidence from India," The IUP Journal of Applied Finance, IUP Publications, vol. 20(2), pages 18-36, April.
    • Handle: RePEc:icf:icfjaf:v:20:y:2014:i:2:p:18-36
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    Cited by:

    1. Indārs, Edgars Rihards & Savin, Aliaksei & Lublóy, Ágnes, 2019. "Herding behaviour in an emerging market: Evidence from the Moscow Exchange," Emerging Markets Review, Elsevier, vol. 38(C), pages 468-487.

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