Herding Behaviour in the Chinese and Indian Stock Markets

The existence of herding behaviour challenges the validity of an Efficient Market Hypothesis. This study examines herding behaviour in the Chinese and Indian stock markets; our findings suggest that herding behaviour exists in both stock markets. The level of herding depends on the market conditions. In the Chinese market, herding behaviour is greater when the market is falling and the trading volume is high. On the other hand, in India the study finds herding behaviour occurs during the up market conditions. Herding behaviour is more prevalent during large market movements in both the markets. Relatively, a lower prevalence of herding behaviour was detected in the Indian stock market