The Prevalence of Herding in Indian Auto Sector: Implications for Market Efficiency

Arundhathi P S, Research Scholar, Department of Commerce, Christ College (Autonomous), IrinjalakudaFollow
Aslam P S, Research Scholar, Department of Commerce, Christ College (Autonomous), IrinjalakudaFollow
Libison K B, Assistant Professor, Department of Commerce, St. Aloysius College, ElthuruthFollow

Article Type

Research Article

Abstract

The worldwide catastrophes due to the spread of Wuhan virus, India had witnessed an explosive change in the economic activity, mainly in the investment pattern. This made the investors to do panic trading by following what others were doing in the market. We offer an empirical analysis to examine the presence of herding in Indian Automobile Sector during pre-pandemic and pandemic period (COVID-19). To detect the presence of herding, we applied Cross Sectional Absolute Deviation (CSAD) and One-way ANOVA was employed to examine whether there is any significant difference in the auto index during Pre pandemic and pandemic period. The result shows that herding behaviour is driven by panic and shocks during the pandemic period. However, herding is not prevalent during the pre-pandemic and whole period. This paper concludes that the Indian market is efficient unless there is any panic or fear among the investors.

Keywords

COVID-19, Herding Behaviour, Investment

Recommended Citation

P S, Arundhathi; P S, Aslam; and K B, Libison (2023) "The Prevalence of Herding in Indian Auto Sector: Implications for Market Efficiency," Arab Economic and Business Journal: Vol. 15 : Iss. 1 , Article 6.
Available at: https://doi.org/10.38039/2214-4625.1031