Analyzing Volatility Patterns in the Indian Stock Market: With Special Reference to the Banking and IT Sector

Abstract

The study delves into the volatility trends within the Indian stock market, with specific attention directed towards the banking and IT sectors. Notably, recent changes in the market have seen errors that have never been seen before, which is very different from the current information environment. This strange behavior has caused a lot of chaos in the market, which is being driven by investors' unexpectedly high levels of optimism. Because of this, there has been a shift from prudent investing to irrational optimism, which has made market swings worse. The study tries to figure out why these changes happen by looking at patterns of instability seen in the BSE Sensex and comparing them with similar trends seen in the banking and IT sectors over a long period of time. Furthermore, the addition of dematerialization to the capital market's rules has made it easier to look at market instability and what it means for market efficiency in a more complex way. In conclusion, this study's results are important for both Indian and foreign buyers, as well as regulatory bodies, because they help them better understand how the Indian stock market works and what its potential is.