Herding: Does it Exist for Consumer Goods Sector Stocks?

Proceedings of The 2nd International Conference on Business, Management and Finance

Year: 2019

DOI: https://www.doi.org/10.33422/2nd.icbmf.2019.11.764

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Herding: Does it Exist for Consumer Goods Sector Stocks?

Ms Bharti and Ashish Kumar




Consumer goods sector has long been considered as defensive and not prone to business cycles. However, the recent economic meltdowns, volatility spillovers and investment patterns suggest that the sector is subject to market movements and no more insulated. The present study examines the fast moving consumer groups industry stocks trading in the Indian equity market for the behavioral bias of herding. We use the modified methodology of cross sectional absolute deviation on the daily prices of the index and its constituents for the time period January 01, 2008 to December 31, 2018. No evidence of herd behavior is found at the aggregate market level or during market asymmetries of bear and bull phase. However, significant negative herding is seen during the sample period. The paper suggests the scope of future research and the implications of the study for the market participants.

Keywords: Consumer Goods Sector, Volatility Spillover, Herd Behavior, Cross Sectional Absolute Deviation, Behavior Bias.