Dynamic Implications of Stock Volatilities: Issues and Reflections from Evidences
DOI:
https://doi.org/10.53573/rhimrj.2023.v10n05.003Keywords:
Stock volatility, Spillover effects, Volatility Clustering, Risk, ReturnAbstract
Stock markets all over the world have been subjected to forward selling, options trading, and forward contracts both in terms of purchasing and selling alongside the simultaneous, continuous and persistence operations of arbitrages. Analytically, stock prices have been affected by a range of factors. The variations in the stock prices are governed by overall macroeconomic factors at aggregate level and to a great extent by firm specific or corporate specific variables. The investigation in this attempt is undertaken to analyze both the volatility and issues around volatilities over recent years both in terms of Indian and international contexts. The idea adopted in this article is an exploratory literature review analysis, wherein we have demonstrated various empirical works in short details that are critical to analyze the topic, and accordingly the study has derived insightful inferences to show how stock markets have produced important institutional and information frameworks in which stock volatilities were possible. Volatility clustering seems to be strongly connected to transmission of spillover effects across the markets. This spillover effect determines the co-movements of stock prices across different segments and growth of stock markets. Financial markets and contagion effects are severe episodes significantly affecting stock prices and could destabilized financial markets. As a welfare government, policies need to be consistent and co-current in order to tackle volatility clustering and spillover effects and also mitigating repercussions of financial crises and contagion effects.
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