TY - JOUR
AU - Neupane, Suman
AU - Fan, Zhebin
AU - Yanes Sanchez, Daniel
AU - Neupane, Biwesh
PY - 2024
DA - April
TI - Diverse investor reactions to the COVID-19 Pandemic: insights from an emerging market
JO - Journal of International Financial Markets, Institutions and Money
VL - 93
DO - https://doi.org/10.1016/j.intfin.2024.102000
AB - We examine the reaction of different investor categories to the COVID-19 pandemic in the Indian market throughout 2020. Using quarterly ownership data, we find significant differences across various investor categories during the crisis and post-crisis periods. We find that domestic institutional investors (DIIs) exhibit 'flight-to-quality' behavior, foreign institutional investors (FIIs) exhibit 'fire-sale' behavior, and retail investors (RIs) act as informed investors who provide liquidity during the crisis period. We observe conservative behavior from DIIs and FIIs throughout 2020, during which RIs initially increase their holdings in high-risk stocks but move to high-quality stocks in the final quarter of 2020. FIIs contribute the most to lower stock returns and higher volatility during the crisis period. Using daily FII trade-level data, we find that long-term FIIs start buying high-quality stocks before other categories in the post-crisis period, with short-term FIIs driving returns and volatility during the crisis period.
PB - Elsevier
UR - https://strathprints.strath.ac.uk/88766/
KW - Coronavirus (COVID-19)
ER