ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Is There a Bubble in the Indian Stock Market?

The recent surge in stock prices in India sparked off a debate on a possible bubble in the Indian stock market. The attempt here is to detect and date stamp bubbles present, if any, in the Indian stock market using a recursive econometric technique. This technique can help identify bubbles as they emerge, not just after they have exploded. This study does not indicate any explosive price behaviour in the Indian stock market. Thereby, the presence of any bubbles during the study period is not detected. The sharp decline and the subsequent recovery of the stock prices during the past 15 months was most probably an overreaction to the pandemic.

Financial Fragility in ‘Mature’ Markets

With rising non-financial corporate debt and evidence of elevated borrowing levels among non-bank financial companies, the fragility resulting from excess leverage has returned to haunt developed country financial markets. The fact that the collapse of a little-known family office firm like...

Illusion of Democracy in Financial Markets

Democratising of financial trading fails to recognise the skewed character of finance markets.

Increased Derivatives Trading in India

Based on a study of the futures and options on the National Stock Exchange’s benchmark index NIFTY and 10 other randomly selected NSE stocks, it is found that the spot market has been dominating the futures and options markets. The dominance of the futures market over options has diminished after the increase in the Security Transaction Tax. It is proposed that the STT on protective put and hedged call positions should be reduced to give a boost to the options market. Whether introduction of financial derivatives led to better price discovery in India is explored. Price discovery is analysed simultaneously in the three markets for the individual stocks—options, futures, and spot.
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