Covid-19 Induced Herding: A Case of Sectoral Indices of The Indian Stock Market

Herding tendencies are likely to be more prominent during the crisis period. The Covid-19 outbreak has been nothing less than a crisis for the world. Assuming the possibility of Covid-19 induced herding among investors, this study attempts to examine the behaviour in the Indian stock market (S&P BSE) by analyzing the daily returns data of 10 indices and the S&P BSE Sensex using the CSAD model from January 01, 2015 to December 31, 2020, by dividing the period into three sets: whole period, pre Covid-19 outbreak period and during Covid-19 outbreak period. The complete analysis is done for three different states of the markets (general – overall market condition, bullish and bearish). The study finds the Indian stock market to experience sector specific herding behavior during Covid-19 period under the study, in general, as well as during bullish and bearish trends.