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FIIs herding in energy sector of Indian stock market

Veena Madaan (Humanities and Management, Chhattisgarh Swami Vivekanand Technical University, Bhilai, India)
Monica Shrivastava (FMS, Shri Shankaracharya Technical Campus, Bhilai, India)

South Asian Journal of Business Studies

ISSN: 2398-628X

Article publication date: 25 December 2020

Issue publication date: 15 April 2022




This paper investigates herding behavior and its persistence among foreign institutional investors (FIIs) in the individual stocks of the energy sector of Indian stock exchange by focusing on post turmoil period. The study also examines the relation of herding with the individual return, market return, trading volume and conditional volatility of individual and market return.


The presence of herding is investigated by Lakonishok et al. (1992) model, value-based and count-based herd ratio measure among FIIs in individual stock of energy sector post turmoil period. Further, run test was employed to check the persistency in herding and multivariate distributed lag to investigate the relationship with the market determinant.


The result indicates the existence of herding in most of the companies and strong persistence in all the companies. The intensity of buy side herding is higher than sell side. Herding and individual return both are significant driving forces of FIIs herding, while trading volume and market volatility in few companies exhibit inverse relationship.

Research limitations/implications

This study is limited to investigation of energy sector stock.

Social implications

Stock market is significantly influenced by FIIs and their propensity to herd may generate instability in the stock market. Therefore, regulatory authority should continuously monitor the flow of fund by FIIs.


Herding in the individual stock of the energy sector was not previously performed.



Madaan, V. and Shrivastava, M. (2022), "FIIs herding in energy sector of Indian stock market", South Asian Journal of Business Studies, Vol. 11 No. 2, pp. 174-194.



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