Abstract
Investment behavior is influenced by various behavioral biases. Two among them are disposition effect and anchoring. Using market level data, we investigate the presence of disposition effect in Indian stock markets. Initially, it was found that high (low) trading volumes are not associated with winner (loser) stocks. Further based on the evidence provided by studies done on market level data, we consider abnormal trading volumes as the proxy for disposition effect. Investors’ tendency to update their reference points and the prominence of historical prices (anchors) as reference points allowed a study to test the association between abnormal trading volumes and historical prices. Except for familiar and highly liquid stocks (Nifty50 index stocks) this study found that abnormal trading volumes are associated with a significantly more percentage of winning days than that of losing days. This study is useful for investors and fund managers while taking trading decisions and also when forming the portfolios.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
