LITERATURE REVIEWS

As we know that each study has some background information is gather by the researcher from the other studies conducted by the other people in the area. Revises are the guidelines to understand the problem so reviews provide some secondary data regarding the problem. Lamdin(2003) conducted research on Corporate bond interest rates are a subject of concern to investment analysts, corporate financial managers, and scholars. In this article the yield spreads between corporate bonds and government bonds, and between differing quality corporate bonds is examined during recent decades. Also, the relationship between yield spreads and stock market movements is examined. Yield spreads vary considerably over this period, and have varying trends. Causality tests show that stock market movements precede changes in yield spreads. Pandey (2003) conducted that Market efficiency has an influence on the investment strategy of an investor because if market is efficient, trying to pickup winners will be a waste of time. In an efficient market there will be no undervalued securities offering higher than deserved expected returns, given their risk. On the other hand if markets are not efficient, excess returns can be made by correctly picking the winners. In this paper, an analysis of three popular stock indices is carried out to test the efficiency level in Indian Stock market and the random walk nature of the stock market by using the run test and the autocorrelation function ACF (k) for the period from January 1996 to June 2002. The study carried out in this paper has presented the evidence of the inefficient form of the Indian Stock Market. From autocorrelation analyses and runs test we are able to conclude that the series of stock indices in the India Stock Market are biased random time series. The auto correlation analysis indicates that the behavior of share prices does not confirm the applicability of the random walk model in the India stock market. Thus there are undervalued securities in the market and the investors can always excess returns by correctly picking them.

Pagano and Volpin (2005) conducted research on a political economy model where there is mutual feedback between investor protection and stock market development. Better investor protection induces companies to issue more equity and thereby leads to a broader stock market. In turn, equity issuance expands the shareholder base and increases support for shareholder

Accordingly. but also of the subjective characteristics of the investor. and show that it is correlated with cross-border M&A activity. controlling for country and year effects and endogeneity issues. they will buy less. In deciding whether to buy stocks. Sapienza and Zingales (2007) conducted research on they provide a new explanation to the limited stock market participation puzzle. The model's predictions are tested on panel data for 47 countries over 1993-2002. investors factor in the risk of being cheated.protection. consistent with the model. Mishra and Malhotra(2007)conducted that The study of volatility spillovers provides useful insights into how information is transmitted from stock market to foreign exchange market and vice versa. The calibration of the model shows that this problem is sufficiently severe to account for the lack of participation of some of the richest investors in the United States as well as for differences in the rate of participation across countries. financial managers can obtain more insights in the management of their international portfolio affected by these two variables. conditional on buying stock. This should be particularly important to domestic as well as international investors for hedging and diversifying their portfolio . The results indicate that there exists a bidirectional volatility spillover between the Indian stock market and the foreign exchange market with the exception of S&P CNX NIFTY and S&P CNX 500. The perception of this risk is a function not only of the objective characteristics of the stock. We also find evidence consistent with these propositions in Dutch and Italian micro data. We also document international convergence in shareholder protection to best-practice standards. The findings of the study also suggest that both the markets move in tandem with each other and there is a long run relationship between these two markets. This feedback loop can generate multiple equilibria. The results of significant bidirectional volatility spillover suggest that there is an information flow (transmission) between these two markets and both these markets are integrated with each other. This paper explores volatility spillovers between the Indian stock and foreign exchange markets. with investor protection and stock market size being positively correlated across equilibria. Guiso. Less trusting individuals are less likely to buy stock and. as well as in cross country data.

and some other publications as well. and anchoring. FIIs in Indian stock market and some of the most talked about movements of sensex starting with the secondary market summary of each year. by behavioural factors like greed and fear. individual investors do not always make rational investment decisions. education. however. and decision-making in the Indian context. investment portfolio. the author finds that unlike the classical finance theory suggests. Though the sensex is a barometer and after seeing such fluctuations one could be afraid of investing. to a great extent. we can be hopeful for a positive market.FII s investments in BSE sensex reveal that the liquidity as well as volatility were highly influenced by FII flows. heuristics.Investment advisors and finance professionals must incorporate behavioural issues as risk factors in order to formulate effective investment strategies for individual investors. cognitive dissonance. and other demographic factors. These behavioural factors must be taken into account as risk factors while making investment decisions. mental accounting. The information is then integrated in order to understand the interrelationships of investor¶s perception of risk. So even after such downturns. Chittedi(2008) formulated research on the paper analyzed a performance of the sensex vs. income. The research is based on the secondary data relating to investments. After going through all the analysis regarding the stock market in last 2 years. often ignored. behavioural issues are the newest of the things which must be considered while formulating investment strategies. finance. behavioural factors. The impact of behavioural aspect of investing is.With an objective to create investor¶s confidence in the stock market.The research uses the literature relevant to behavioural decision-making and investor¶s psychology. FIIs are significant factor determining the liquidity and volatility in the stock market prices.Through this research.Chandra(2008) outlines that The decision-making by individual investors is usually based on their age. . Their investment decision-making is influenced. and economics available on the Internet. The objective of this paper is to explore the impact of behavioural factors and investor¶s psychology on their decision-making. thus leading to better investment decision-making. previous publications of the author. and to examine the relationship between investor¶s attitude towards risk and behavioural decision-making. we can say that stock market touched its peak at 21000 but then crashed badly. This research will help investment advisors and finance professionals judge investor¶s attitude towards risk in a better way.

preferences and various investment strategies in Indian stock market on the basis of a survey among 93 investment analysts. momentum strategies. Most of the respondents strongly agree that various company fundamentals (such as size. following FIIs investment behaviour. This notion again violates the basic assumption of efficient market hypothesis (EMH) that no one can beat the market and earn the profit in excess of market.Tripathi (2008) conducted that This paper examines the perceptions. Presence of such anomalies in any stock market is the biggest threat to the concept of market efficiency as these anomalies may enable stock market participants beat the market by observing these patterns. buying stocks on the basis of 30 days moving average and buying stocks on the basis of relative strength index. In a nutshell there has been a shift from purely technical analysis based strategies to the one which involves both fundamental and technical analysis. fund managers and active equity investors based at Delhi and Mumbai during MayOctober 2007. This study has been conducted to find out whether Turn of the Month Effect and Time of the Month Effect in BSESENSEX. the capital weighted index of Bombay Stock Exchange (BSE) for the period April 1998 to March 2008 has been used in this study. book to market equity. Such trends or consistent patterns occur at a regular interval or at a specific time in a calendar year. This study has been conducted to test the market efficiency in Indian stock market by . Five most widely used investment strategies in Indian equity market are size based strategies. Survey findings reveal that investors use both fundamental as well as technical analysis while investing in Indian stock market. Moreover the investment horizon of investors has also reduced due to higher volatility. Chandra(2009) conducted that Calendar effect connotes the changes in security prices in stock market following certain trends based on seasonal effects. This study tried to test this difference by dividing a month into segments and then analyzing the returns for these segments separately in order to find out that in which segment daily stock returns are highest. Daily stock returns are also different from each other at different points of time during a month. Data pertaining to daily stock index of SENSEX.) significantly influence stock prices and hence addition of these factors in asset pricing model can better explain cross sectional variations in equity returns in India. leverage etc. There has been substantial change in investment strategies used by active investors in Indian stock market over the past five years. price earnings ratio.

This study . the largest stock exchange in India. In order to test the evidence of calendar anomalies. The reason behind this trend could be the cognitive belief of investors with regard to new and positive changes in policies and newer information in the coming month. Chandra(2009)Calendar effect connotes the changes in security prices in stock market following certain trends based on seasonal effects.examining calendar effect present in Bombay Stock Exchange. leading to low returns at the end of month. BSE¶s leading index BSE 30 SENSEX has been selected as a sample for this study. This notion again violates the basic assumption of efficient market hypothesis (EMH) that no one can beat the market and earn the profit in excess of market. For both the effects. the capital weighted index of Bombay Stock Exchange (BSE) for the period April 1998 to March 2008 has been used in this study. Both the effects are found to be almost same. This results in selling pressure by investors with the hope to get positive benefits. investors start buying into stocks following the same cognitive belief and incorporating new information. Data pertaining to daily stock index of SENSEX. Returns during a month are analyzed by dividing that month into three parts separately. And it was found that early days of the month witness higher mean returns than later days of the same month. This study tried to test this difference by dividing a month into segments and then analyzing the returns for these segments separately in order to find out that in which segment daily stock returns are highest. Such trends or consistent patterns occur at a regular interval or at a specific time in a calendar year. Those at helm should chalk out policies to check this anomalous behaviour of the stock market so that the market could become really efficient. Existence of these anomalies in Bombay Stock Exchange is against the principle of market efficiency as it may offer abnormal economic rewards to the investors tracking these anomalies. significant values were found. Daily stock returns are also different from each other at different points of time during a month. the Turn of the Month effect as well as the Time of the Month effect. Results from this study reveal that a very anomalous behaviour towards returns has been found in BSE 30. Presence of such anomalies in any stock market is the biggest threat to the concept of market efficiency as these anomalies may enable stock market participants beat the market by observing these patterns. This study has been conducted to find out whether Turn of the Month Effect and Time of the Month Effect in BSE-SENSEX. With the beginning of new month.

with suitable restrictions. significant values were found. This results in selling pressure by investors with the hope to get positive benefits. Existence of these anomalies in Bombay Stock Exchange is against the principle of market efficiency as it may offer abnormal economic rewards to the investors tracking these anomalies. Although the FIIs have been blamed for large and concerted withdrawals of capital from the country at the time of recent financial crisis. in India. In order to test the evidence of calendar anomalies. they . especially when the country has emerged as one of the most attractive investment destinations in Asia. Since then foreign portfolio inflows through FIIs. After the launch of the reforms. 1992. From September 14. FIIs were permitted to invest in financial instruments. investors start buying into stocks following the same cognitive belief and incorporating new information. leading to low returns at the end of month. Both the effects are found to be almost same. The reason behind this trend could be the cognitive belief of investors with regard to new and positive changes in policies and newer information in the coming month. For both the effects. Foreign Institutional Investors (FIIs) have been allowed to invest in all securities traded on the primary and secondary markets. With the beginning of new month. the largest stock exchange in India. BSE¶s leading index BSE 30 SENSEX has been selected as a sample for this study. the Turn of the Month effect as well as the Time of the Month effect. debentures and warrants issued by companies which were listed or were to be listed on the Stock Exchanges in India and in schemes floated by domestic mutual funds. Returns during a month are analyzed by dividing that month into three parts separately. Mishra(2009) conducted that Until the 1980s. Those at helm should chalk out policies to check this anomalous behaviour of the stock market so that the market could become really efficient. including shares.has been conducted to test the market efficiency in Indian stock market by examining calendar effect present in Bombay Stock Exchange. Results from this study reveal that a very anomalous behaviour towards returns has been found in BSE 30. have been important from the policy perspective. And it was found that early days of the month witness higher mean returns than later days of the same month. there was a general disinclination towards foreign investment or private commercial flows as India¶s development strategy was focused on selfreliance and import substitution and current account deficits were financed largely through debt flows and official development assistance.

controls for wealth. provides the evidence of positive correlation between FII net flows into India and stock market return. and other demographic and occupational information. measured early in adult life. 2009. and that omitted familial and nonfamilial variables are unlikely to account for our findings.have emerged as important players in the Indian capital market. other things equal. And. The perusal of literature revealed the most of the researches are in foreign. They have discussed about the various problem faced --------------------------------but on one -----------------------------------------------------------------------------------------------------------------------------------------------------. income. the net equity investment by FIIs in India is Rs.10 crore with the registration of 1662 foreign institutional investors. the analysis finds that the movements in the Indian capital market are fairly explained by the FII net inflows Grinblatt . These supplemental data show that our results apply to both females and males. which exists even among the 10% most affluent individuals.Keloharjuand and Linnainmaa (2010) formuted research on An individual¶s IQ stanine. IQ also is related to diversification: high IQ investors are more likely to hold mutual funds and larger numbers of stocks.52. 2. in this paper an effort has been made to examine the performance of the Indian capital market by empirically studying the impact of net equity investment by FIIs on stock returns. The high correlation between IQ and participation. The study using monthly data on Sensex based stock return and net FII flows over a period of 17 years spanning from Jan 1993 to May 2009. As on June 4. Thus. Supplemental data from siblings are used with both an instrumental variables approach and regression procedures that control for family effects.233. is monotonically related to his stock market participation later in life. .