CHAPTER-2: LITERATURE REVIEW

 Manh Ha Duong & Boriss Siliverstovs (2006). The Stock Market and Investment, this
article examines the relationship between stock prices and total investment in major European
countries such as France, Germany, Italy, the Netherlands, and the United Kingdom. The increased
integration of European financial markets will likely result in an even stronger correlation between
stock prices in different European countries. This process may also lead to convergence in economic
development in European countries if the developments in the stock markets affect real economic
components such as investment and consumption. In fact, our vector autoregressive models show that
the positive correlation between changes in stock prices and investment is generally significant.
Therefore, monetary authorities must monitor the reactions of stock prices to monetary policy and
their effects on the business cycle.

 Azarenkova Galina, Shkodina Iryna and Kavun Sergii (2015). Analysis of the Global
Stock Market Trends, in this paper the authors concluded that the dynamics of different segments
of the world stock market depends not upon the economic situation in certain countries, but upon the
actions of central banks, in the first place of the Federal Reserve Bank that actively pursue the policy
of the quantitative easing. The desynchronization of the dynamics of the stock markets of different
countries is an indication of the increased fluctuations at the global level, the changes in the
worsening financial market situation that cause the weakening of the economic growth rate and
become serious risks for the global economy.

 Rashmi Chaudhary, Priti Bakhshi and Hemendra Gupta (2020). Volatility in

International Stock Markets: An Empirical Study during COVID-19, the paper attempts to
analyse the impact of COVID-19 on the performance of the top 10 stock indices of the global
economy, as measured by GDP. It analysed with daily data from January 2019 to June 2020 in their
study. Financial analysts are frequently challenged with the assignment of diversifying assets in order
to form efficient portfolios with a higher risk to reward ratio. The objective of the research paper was
to analyse the influence of COVID-19 on the return and volatility of the stock market indices of the
top 10 countries based on GDP using a widely applied econometric model—generalized
autoregressive conditional heteroscedasticity (GARCH).
 HaiYue Liu, Aqsa Manzoor, CangYu Wang, Lei Zhang and Zaira Manzoor (2020). The
COVID-19 Outbreak and Affected Countries Stock Markets Response, the paper evaluated the
short-term impact of the coronavirus outbreak on 21 leading stock market indices in major affected
countries including Japan, Korea, Singapore, the USA, Germany, Italy, and the UK etc. The
consequences of infectious disease are considerable and have been directly affecting stock markets
worldwide. They used an event study method and the results indicated that the stock markets in major
affected countries and areas fell quickly after the virus outbreak. Countries in Asia experienced more
negative abnormal returns as compared to other countries. Further panel fixed effect regressions also
support the adverse effect of COVID-19 confirmed cases on stock indices abnormal returns through
an effective channel by adding up investors’ pessimistic sentiment on future returns and fears of
uncertainties.
 Werner F.M. De Bondt and Richard Thaler (1985). Does the Stock Market Overreact,
this research paper shows that experimental psychology, violating Bayes' rule, suggested that most
people "overreact" to unexpected and dramatic news events. The question then arises whether such
behaviour is significant at the market level. The term overreaction carries with it an implicit
comparison to some degree of reaction that is considered to be appropriate.
 Sudharshan Reddy Paramati and Rakesh Gupta (2011). An Empirical Analysis of Stock
Market Performance and Economic Growth: Evidence from India, this paper had aimed to
investigate whether stock market performance leads to economic growth or vice versa; The study
also examines the short and long-run dynamics of the stock market. They had used monthly
Industrial Production Index (IIP) and quarterly Gross Domestic Production (GDP) data from April
1996 to March 2009. This had provided rich data for empirical analysis. Stock market performance
and economic growth have been the subject of intense theoretical and empirical studies. This debate
revolves around whether stock price movements are affected by economic changes or whether stock
market performance helps support economic growth.
 Kamal A. El-Wassal (2013). The development of Stock Markets: In Search of Theory,
this article aimed to provide a framework for the main determinants of stock market development.
Evaluating stock market development requires not only an understanding of its main determinants,
but also a clear definition of what "stock market development" means and how progress towards it
can be measured. The article revisits the concept of stock market development and proposes five
dimensions to evaluate it. This article has provided a framework for the main determinants of stock
market development. Evaluating stock market development requires not only an understanding of its
main determinants, but also a clear definition of what "stock market development" means and how
progress towards it can be measured. This article revisits the concept of stock market development. It
is not enough for an exchange to be large and liquid to thrive. In addition to being large and liquid
compared to the economy, the market should not be overly concentrated, be strongly linked to the
real sector, and grow in proportion to economic activities.
 Madhusudan (1998). Persistence in the Indian Stock Market Returns: An application of
Variance Ratio Test, Madhusudan found that BSE sensitivity and national indices did not follow
random walk by using correlation analysis on monthly stock returns data over the period January
1981 to December 1992.
 Bhanu Pant and Dr. T.R.Bishnoy (2001). Testing Random Walk Hypothesis for Indian
Stock Market Indices, he analysed the behaviour of the daily and weekly returns of five Indian
stock market indices for random walk during April 1996 to June 2001.They found that Indian Stock
Market Indices did not follow random walk.
 Arun Jethmalani (1999). Risky Business, he reviewed the existence and measurement of
risk involved in investing incorporate securities of shares and debentures. He commended that risk is
usually determined, based on the likely variance of returns. It is more difficult to compare 80 risks
within the same class of investments. He is of the opinion that the investors accept the risk
measurement made by the credit rating agencies, but it was questioned after the Asian crisis. He
concluded his article by commenting that risk is not measurable or quantizable. But risk is calculated
on the basis of historic volatility. Returns are proportional to the risks, and investments should be
based on the investors' ability to bear the risks, he advised.