Title

                            Recent Trends in the Stock Market in India:

                                         Literature Review

 Introduction

The Indian stock market has witnessed significant changes and developments in recent years which
played a crucial role in the country's economic landscape. This review aims to examine how analysts
and investors behave to utilize market trends to manage risks, identify investment opportunities,
and make informed portfolio decisions. The problematic nature of, market volatility during COVID,
and managing the risk plays an important role in investment behavior. By examining these trends,
the literature seeks to shed light on the factors driving market fluctuations, identify emerging
investment opportunities, and evaluate the impact on the Indian economy. Understanding the dynamics
of the Indian stock market is essential for investors, analysts, and policymakers, as it enables
them to make informed decisions, manage risks effectively, and contribute to the sustainable growth
of the nation's financial markets.

Literature review:

A study by Chakrabarty and Mohan (2021) found that fintech platforms have increased significantly
in the early 2010s, with more than 80% of retail investors using these platforms for investing in
the stock market. Another trend in the Indian stock market is the increasing use of financial
technology (fintech) platforms. These platforms provide retail investors with access to financial
products such as mutual funds, exchange-traded funds (ETFs), and initial public offerings (IPOs).

According to Bansal (2013), the Indian stock market has also witnessed significant changes in terms
of regulatory reforms. In 2020, the Securities and Exchange Board of India (SEBI) introduced
several measures to improve transparency and investor protection. One of the key reforms was the
introduction of a framework for listing commercial papers on stock exchanges, which has made it
easier for companies to raise short-term funds. SEBI focuses on improving transparency and investor
protection through stringent disclosure requirements, corporate governance norms, and monitoring
systems. It conducts investor education programs and provides a grievance redressal mechanism.
SEBI's regulatory reforms adapt to market dynamics and international best practices, ensuring a
trustworthy environment for investors. However, the Indian stock market is not without its
challenges. One of the major concerns is the impact of the COVID-19 pandemic on the market. Bora
and Basistha (2021) found that the pandemic significantly negatively impacted the Indian stock
market, with the Nifty 50 index falling by more than 35% in the first few months of 2020.

Poshakwale & Mandal (2014) studied the herding behavior of investors in the Indian stock market.
The study looks at whether or not investors prefer to follow the herd and base their judgments on
what other people are doing. The research discovers evidence of investor herding behavior through
empirical analysis utilizing data from the National Stock Exchange, particularly during times of
significant market volatility and uncertainty. According to the study, herding behavior can greatly
impact stock prices and market dynamics. Market players and regulators must comprehend and analyze
investor behavior, particularly herding tendencies, in order to develop effective policies and
rules that will support a more efficient and stable stock market environment in India.

The research by Satish & Padmasree (2018) employed a quantitative approach to examine herd behavior
in the Indian equity market. They used daily data from the National Stock Exchange (NSE) and Bombay
Stock Exchange (BSE) for the period between 2005 and 2010. The sample consisted of 50 highly traded
stocks. According to them, herding behavior is the most common behavior as the Potential returns of
stocks and actual returns vary; to address this issue and enhance the ability of investors'
investing decisions, behavioral economists stress the significance of psychological biases. The
investor's method for making investment decisions. Research has shown that the behavior of the
share price is at variance with what well-known rational models predict since projected returns are
not constant over time. In their study, Prosad et al. (2012) utilized various statistical
techniques, including correlation analysis, panel regression, and Chow tests, to explore the
presence and implications of herd behavior in the Indian context and found significant evidence of
herd behavior in the Indian equity market. They observed positive correlations between market
returns and trading volume, indicating that investors tend to follow the crowd during periods of
market volatility. The study also revealed a positive relationship between herding behavior and
stock price volatility, suggesting that herding exacerbates market fluctuations.

Conclusion:

The literature review highlights the significant changes and developments witnessed in the Indian
stock market and their implications for investors, analysts, and policymakers. The increasing use
of fintech platforms has provided retail investors with greater access to financial products,
fostering their participation in the stock market. Regulatory reforms implemented by SEBI have
enhanced transparency, investor protection, and corporate governance, creating a trustworthy
environment for market participants. However, the COVID-19 pandemic had a notable negative impact
on the Indian stock market, emphasizing the need for risk management strategies in times of
uncertainty.

The presence of herding behavior among investors in the Indian stock market has been identified as
a significant factor influencing stock prices and market dynamics. Recognizing and understanding
this behavior is crucial for the development of effective policies and rules that promote a stable
and efficient stock market environment.


Overall, this literature review emphasizes the importance of understanding the trends and dynamics
of the Indian stock market. Such understanding enables investors to make informed decisions, manage
risks effectively, and contribute to the sustainable growth of the Indian economy. Continued
research and analysis in this field will further enhance our comprehension of market behavior,
leading to improved investment strategies and financial market regulation.






















References:

Bansal, S. (2013). Role of SEBI in investor protection. South Asian Journal of Marketing &
Management Research, 3(9), 38-52.

Bora, D., & Basistha, D. (2021). The outbreak of COVID‐19 pandemic and its impact on stock market
volatility: Evidence from a worst‐affected economy. Journal of Public Affairs, 21(4), e2623.

Chakrabarty, D., & Mohan, K. (2021). Fintech adoption and investor behavior in Indian stock
markets. Journal of Financial Services Marketing, 26(1), 23-36.

Poshakwale, S., & Mandal, A. (2014). Investor behavior and herding: Evidence from the national
stock exchange in India. Journal of Emerging Market Finance, 13(2), 197-216.

Prosad, J. M., Kapoor, S., & Sengupta, J. (2012). An examination of herd behavior: Empirical
evidence from the Indian equity market. International Journal of Trade, Economics and
Finance, 3(2), 154.

Satish, B., & Padmasree, K. (2018). An empirical analysis of herding behaviour in Indian stock
market. International Journal of Management Studies, 3(3), 124-132.