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PARIDNYA- The MIBM Research Journal

Articles

Volume 5, Issue 1, September 2017

Study of Behaviour of Stock Prices before and Post Addition in Index in India

Published
2017-09-01

Abstract

When a stock is added to a major market index like NIFTY, it instantly attracts attention and trading interest from Index Funds, Exchange Traded Funds (ETFs) and other institutional investors. They add that particular stock to realign their portfolio with index for benchmarking purpose. This study investigates the index inclusion effect on the stocks in the Indian stock market. Researcher has found out that 69% of total stocks added in index since 2001-2017 have given positive returns one month prior to actual addition into index and 70% of total stocks have give positive returns one month post actual addition into index. On an average, stocks have given 4% and 6% return 1 month prior and 1 month post actual addition into index respectively. The results are consistent with the trading behavior of Index Funds, ETF's and other institutional investors.

Keywords

  • Index Inclusion
  • Positive Return
  • Negative Return.

How to Cite

Bendre, M., & Apte, N. (2017). Study of Behaviour of Stock Prices before and Post Addition in Index in India. PARIDNYA- The MIBM Research Journal, 5(1), 57–64. Retrieved from http://www.mibmparidnya.in/index.php/PARIDNYA/article/view/118551

References

  1. Investment Analysis and Portfolio Management (Author : Prasanna Chandra)
  2. Financial Management (M Y Khan, P K Jain)
  3. Fundamentals of Financial Management (Eugene Brigham, Joel Houston)
  4. The Analysis and Use of Financial Statement (Gerald White, Ashwinipaul Sondhi)
  5. The Dark side of Valuations(Aswath Damodaran)
  6. National stock Exchange (nseindia.com)

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