A Study of Relationship Between Indian Stock Market And International Stock Market
Published: 2022
Author(s) Name: Hitendra Lachhwani, Divya Issrani and Vanshika Ramchandani |
Author(s) Affiliation: Assistant Prof., Finance Area, Tolani Motwane Inst. of Mgt. Studies, Adipur, Gujarat.
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Abstract
We have conducted the study to know the relationship between Indian stock
market and international stock markets. As in today’s time period people are
investing comparatively more in stock market, so it becomes essential to take
calculative risk. As we know after globalization, Indian investors have been
trading globally and so for minimizing their risk in stock market, which is due to
volatility and other factors. This study will help investors to know about the
trend of past 10 years for its inter linkages between the stock markets of
countries namely India, US, Japan and China.
For minimizing the loss in stock market, we have tested the daily data from
January 2010 to December 2020 by applying Unit Root Test and Engle-Granger
Cointegration Test. The results of Augmented Dickey Fuller Test shows that the
data of all stock markets are stationary at first difference. And the results of
Engle-Granger Causality Test shows that there exists cointegration between the
stock markets.
This test has given the results that stock market of India is interlinked with US,
Japan and China. Now it can be said that decision affecting the stock market of
US, Japan or China [in any of the mentioned countries] will also affect the
Indian stock market.
Investors now can take decision wisely about their international trading in stock
market. As the stock markets are interlinked with Indian stock markets, this also
means that decisions or changes or the factors affecting the Indian stock market
will also affect the stock markets of US, Japan and China.
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