Jeevan Nagarkar

The purpose of the study was to analyze the effectiveness of technical trading strategies in trading stocks of selected Indian companies represented in the Nifty 50 Index. The research was done using secondary data from January 2022 to August 2022. Hourly share prices of 14 largest companies as per market capitalization from 14 different sectors from the Nifty 50 Index were considered as a part of the study. Simple Moving Average, Exponential Moving Average – Relative Strength Index and Bollinger Bands – Relative Strength Index – strategies considered in the study. It was found that strategy based on Bollinger Bands and Relative Strength Index performed the best. Performance was considered with respect to both the number of stocks having a net profit and the number of stocks that were able to outperform the buy-and-hold strategy for the time period considered. The study considered several combined strategies and performance indicators, whereas previous studies used limited indicators. Out of the 14 stocks considered, the Simple Moving Average strategy was able to generate net profit for 8 stocks and it outperformed the buy-and-hold strategy for 6 stocks, Exponential Moving Average – Relative Strength Index strategy generated net profit for 6 stocks and it outperformed the buy-and-hold strategy for 5 stocks, and the Bollinger Bands – Relative Strength Index generated net profit for 11 stocks and it outperformed the buy-and-hold strategy for 10 stocks. The Bollinger Bands – Relative Strength Index strategy was able to outperform as it was more dynamic and entered and exited positions actively.

Type of the article: Research Article

Abstract
Foreign institutional investors (FIIs) have traditionally dominated the Indian equity markets. However, since 2020, the landscape has significantly transformed as the registered investor base at the National Stock Exchange, India, has tripled. This phenomenon is driven by the COVID-19 pandemic and the rise of ‘influencers’ or easy access to financial knowledge. This study investigates the long-term and causative relationship between the Nifty 50 index and the net flows of domestic institutional investors (DIIs) in the Indian stock market, using daily data from April 2017 to March 2022. Employing the Augmented Dickey-Fuller (ADF) test, Johansen cointegration tests, and Granger causality analysis, the findings reveal a long-term cointegrated relationship between the Nifty 50 and DIIs’ daily flow, both before and after COVID-19. The results reveal a bidirectional Granger causality between the Nifty 50 and DIIs (p-value < 0.02) and NIFTY 50 and FIIs (p-value < 0.00) in the post-COVID era, a shift from the unidirectional pattern observed pre-COVID between NIFTY 50 and DIIs. This indicates that traders and analysts may use DII flows as a leading indicator for NIFTY 50 movements. Studying DII’s interaction with the Nifty 50 index helps assess whether their investment patterns drive market movements or are reactive to them and highlights the resilience of Indian markets to external shocks.