Testing the impact of COVID-19 on trading behavior of the investors: An empirical evidence from Indian Stock Market

Bashir Ahmad Joo and Zahida Farooq
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Bashir Ahmad Joo: Department of Management Studies, University of Kashmir, Srinagar, Jammu and Kashmir, India
Zahida Farooq: Department of Management Studies, University of Kashmir, Srinagar, Jammu and Kashmir, India

Indian Journal of Commerce and Management Studies, 2022, vol. 13, issue 3, 21-29

Abstract: Purpose: Globally, the galloping spread of the deadly COVID-19 pandemic has wreaked a havoc in every sphere of the economy and left the human life out of gear. It has caused significant disruptions in the conduct of business activities and exposed the global economies to a jeopardy, resulting in a severe economic crises. India has suffered drastic consequences due to the outbreak of COVID-19 disease and the consequent lockdowns. A significant number of people lost their lives, which, in turn, had a negative impact on every aspect of the country’s macroeconomic system. Moreover, the contagion has also increased the volatility of the stock markets, which is believed to have a detrimental impact on the stock returns. The main purpose of this study is to examine the impact of COVID-19 outbreak on the trading behavior of Indian investors. Methodology: In this context, the trading volume of Bombay stock exchange was taken as a proxy for trading behavior of the investors and used as a dependent variable. On the other hand, the daily COVID-19 caseload and COVID-19-related deaths were used as proxies for COVID-19 and considered as regressors. In this study, the multiple linear regression model was used to examine the relationship between the investors’ trading behavior and the impact of COVID-19. Findings: The study outcomes reveal that the spread of COVID-19 has not significantly affected the trading behavior of the investors in Indian stock market. Implications: The trading behavior of the investors in Indian stock markets appears to be less sensitive toward the spread of the pandemic during the study period. Originality: Unlike the studies conducted earlier, this study attempts to find the impact of the unprecedented health emergency on the trading behavior of the investors by analyzing the trading volume of the Indian stock market during the chosen period, when the country was in the grip of the pandemic.

Keywords: Bombay stock exchange; COVID-19; stock market; trading behavior; trading volume (search for similar items in EconPapers)
Date: 2022
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DOI: 10.18843/ijcms/v13i3/03

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