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Monthly
Effects in Stock Returns: New Evidence from the Indian Stock
Market
-- B S Bodla and Kiran Jindal
The
efficiency of the capital market has raised various debatable
issues all over the world. Numerous studies give evidence
that the capital markets are informationally efficient and
hence, cannot outperform the market consistently on the basis
of price change predictions. However, some researchers have
also brought into light seasonal effects/calendar anomalies
in the developed markets. This paper investigates one of such
anomalies (monthly effects) in an emerging capital market
(Indian). For this, the daily price index (S&P CNX NIFTY)
data have been collected and analyzed for the period from
January 1998 to August 2005 by segmenting it into three sets,
i.e., 199801, 200205, and 199805. The result of this study
shows that the turn of the month effect and semimonthly effect
are prevalent in the Indian stock market.
©
2006 IUP . All Rights Reserved.
Determinants
of Capital Structure in Public Enterprises
--Vunyale Narender and Abhinav Sharma
The
public sector has played a dominant role in the overall process
of economic development in India. The Public Enterprises (PEs)
have grown in all the areas and contributed heavily to the
industrial development. With the introduction of New Economic
Policy in 1991, the government policy on PEs has been revamped
and PEs have been provided with autonomy along with accountability
and responsibility. In the light of the same, financial management
in PEs has attracted lots of prominence in general and capital
structure decisions in particular by the managers at the PEs.
This paper is an attempt to understand the capital structure
policies adopted by the profit making Central Public Enterprises
and the study has been conducted for the period 199495 to
200405. To compare and contrast with the private enterprises
capital structure policies, a comparative study has been made
for the same period with enterprises of similar industries
in the private sector. The capital structure policies deal
with aspects like the proportion of debt and equity to finance
the company's operations in terms of internal funds visàvis
external funds. It is found that the tangibility of assets
plays a significant role in determining the leverage of the
PEs, the results for NDTS and TAX, infering that the PEs are
not utilizing debt to pay less tax, instead using their internal
resources for the PEs in expansion and financing. The PEs
are mobilizing longterm resources for meeting shortterm
requirements. It can be concluded that the PEs are using pecking
order theory in terms of adapting to the capital structure
policies.
©
2006 IUP . All Rights Reserved.
Factors
Affecting Private Investment in India: An
Application of OLS to Time Series Data
--V
R Prabhakaran Nair
This
paper analyzes the determinants of fixed investment in the
Indian Private Corporate Manufacturing sector for the period
19732002, using Annual Survey of industries data. It is argued
that economic policy of a nation is crucial in determining
the investment behavior in the developing countries rather
than the traditional factors like output and profit. Against
the background of the financial sector deregulation initiated
in India since 1991, this study attempts to analyze whether
the traditional factors or the economic policy variables play
a major role in determining investment behavior. A reduced
form equation, derived from the neoclassical investment theory,
is used for the empirical analysis. Financial Liberalization
Index is constructed for India for the analysis. The results
show that, the traditional determinants like output and profit
still play a major role in determining corporate investment,
rather than the policy variables. Though financial liberalization,
more prominently domestic financial liberalization, produced
an environment conducive for investment, however, it could
not succeed in creating a sustained increase in capital formation.
©
2006 IUP . All Rights Reserved.
Velocity
Circulation of Money: A Case of India
--Srutikantha Devidutta Parida and G Omkarnath
This
study deals with the present situation of income velocity
of money in case of India. It has taken the help of the secondary
sources of data; the main source is the Reserve Bank of India
bulletin. The data has been collected from 195051 to 200102
for broad and narrow money supply and also for GDP. The income
velocity of money is nothing but the ratio of velocity of
circulation of money and, as normally understood, is the ratio
of the level of aggregate expenditure (GDP) at current market
prices in the economy to the average money stock in a given
year. In other words, it is the speed at which the money stock
changes hands. The numerical value of the velocity of circulation
of money is normally greater than unity, indicating that a
unit of money changes hands more than once in a given period.
When in a country GDP at current market prices is increasing
faster than that of the increase in the money supply, the
velocity increases. But when the money supply grows faster
than GDP at current market prices, the velocity of money decreases.
In India the money supply is growing faster than the GDP.
The study examines the two types of income velocity i.e.,
the narrow and the broad income velocity of money, where it
has come to the conclusion that the income velocity of broad
money is declining faster than the narrow income velocity
of money. This is due to certain issues like the growth in
the banking sector, the ratios of the Currency to Aggregate
Deposit (CUAD), aggregates deposit to that of broad money
(ADM3) and the ratio of time deposit in the Total
Deposit (TOD). In case of M3 income velocity has
been declining from the beginning of 197071. It has become
1.40 from 4.34. To show the fall in the income velocity of
money we took the help of the first log difference to know
the larger shocks. From this analysis it is clear that the
income velocity of M3 is declining faster and more
steadily falling than that of the income velocity of M1.
©
2006 IUP . All Rights Reserved.
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