Assessing the price diversity from the market fundamentals: Evidence from India

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Dr. Trinley Paldon

Abstract

The examination upon the association between a composite investor sentiment on the Largecap, Midcap, Smallcap from the NSE nifty indices, and disposable income are studied on a sample data starting from April, 2007 to August, 2020. It was found that there was a long-run association but no short-run association among the variables. However, when a shock is introduced on each variable, they showed a sign of mixed response. Arbitrage constrains were found during less economic activity as per the historical GDP trend from the Reserve Bank of India database. Overall, it was found that the sample taken under this study is indicating evidence of existence of neoclassical theory along with contagion effects as well as disposition effects.

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