E. Geetha

The investment decisions are subjected to risk and return of the financial asset. Options strategies help employ a suitable strategy to balance the risk-return trade-off. The study analyzes the risk-return trade-off of the long straddle, long strangle, long call butterfly (LCB), short straddle, short strangle, and short call butterfly (SCB) strategies. Moreover, it measures the impact of strategy risk and options premiums on strategy return using panel data analysis. Additionally, the study evaluates the performance of options strategies using the excess returns to risk approach under neutral and volatile market conditions. This paper considered companies of top-six sector indices of the National Stock Exchange from 2009 to 2020 and collected data of 18,720 option contracts and 3,744 observations for each strategy (22,464 observations). The study revealed that risks of long straddle and long strangle strategies have a positive impact, and options premiums negatively influence their payoff. ATM call premiums positively affect LCB payoff, while OTM and ITM call premiums positively influence SCB payoff. However, the risks of butterfly strategy did not influence its payoff. The risk of short straddle and short strangle strategies negatively influenced the payoff and were considered riskier strategies. Moreover, short straddle and short strangle strategies enhanced excess returns under both market conditions. The results would help the investors in choosing the appropriate strategy by analyzing the impact of risk on the payoff and the ability to enhance excess returns to the risk of various options strategies to incorporate in their investment.

Personality traits are qualities that make a person distinctive and describe stable behavior patterns. Therefore, understanding the influence of personality traits on behavioral intention will help predict investors’ investment decisions. This study aims to assess the impact of personality traits, i.e., openness to experience, neuroticism, conscientiousness, agreeableness, and extraversion, on investors’ behavioral intentions. Moreover, it assesses the mediating effect of attitude, subjective norms, and perceived behavioral control between investors’ personality traits and behavioral intention. The study employed a structured questionnaire on a sample of 413 retail investors. Further, obtained data were empirically examined on Smart-PLS 3.3 using the PLS-SEM method. The study found that perceived behavioral control, subjective norms, and attitude positively affected behavioral intention. However, the personality traits did not influence the intention directly. Further, mediation analysis revealed that attitude and subjective norm fully mediated the relationship between extraversion, neuroticism, openness, and intention. In contrast, attitude and subjective norms did not exhibit a mediating relationship between agreeableness, conscientiousness, and intention. Finally, perceived behavioral control fully mediated the relationship between personality traits and intention, except for conscientiousness. The study contributes by extending the applicability of the theory of planned behavior by examining the impact of big-five personality traits on behavioral intention and mediating the role of the theory of planned behavior’s dimension between personality traits and intention.

The interrelationship between equity, bond, commodity and forex movements can provide investors with abundant trading opportunities regardless of whether one market is trending upward or downward. Hence, to understand the interlinkage between markets, this study examines the long-run and causal linkage between forex, G-sec bonds, oil prices, gold rates, foreign institutional investment (FII) flows, and equity market and sectoral index returns. Daily time-series data from August 2012 to August 2021 were considered for empirical analysis. Johansen’s cointegration test revealed that foreign exchanges like USD, Euro, GBP and Yen, oil and gold rates, G-bond returns and FII flows were significantly cointegrated with the stock market and sectoral indices in the long run. Further, Granger causality found a uni-directional relationship between forex rates (i.e., USD, Euro, Yen) and the market, as well as sectoral indices, except Nifty 50 and Nifty IT indices. Oil price movements were found to effectively predict future price changes of Nifty consumer durables, auto, IT indices. Gold prices are useful to predict Nifty-Auto, Bank, Financial Services, Oil & Gas and PSU. The study also found a bi-directional relationship from FII inflows to the stock market and sectoral indices. The findings suggest that forex rates, oil prices and FII flows significantly affect India’s stock market and sectoral performance. The study contributes to the existing literature by comprehensively examining the interlinkage between commodities such as oil and gold, foreign exchanges like USD, Euro, GBP and Yen, G-bond, FII flows and the stock market, and fourteen sectoral indices in the Indian context.

Risk aversion plays a crucial role in understanding how individuals make financial decisions and allocate their resources. This study analyzes the influence of risk aversion on behavioral intentions and explores the mediating role of attitudes, subjective norms, and perceived behavioral control. Additionally, it investigates the moderating effect of gender and financial literacy on behavioral intentions of investors. A sample of 400 people was collected from Indian retail investors by administering a structured questionnaire through stock brokering firms, and data were analyzed using Partial least squares – Structural equation modelling in the Smart PLS 3.3.9 software. The research found that risk aversion, attitude, subjective norms, and perceived behavioral control significantly impact an investor’s intention. Among all the antecedents of behavioral intentions, perceived behavioral control (β 0.481*) was found as a significant predictor of the intention compared to attitude (β 0.154*), subjective norms (β 0.224*) and risk aversion (β 0.082*) factors. Further, mediation analysis found that attitude, subjective norms, and perceived behavioral control partially mediated the relationship between risk aversion and intention. Lastly, the multi-group analysis revealed that gender and financial literacy did not moderate the association between risk aversion and intention.

In recent times, macroeconomic factors have become a central focus of interest in international trade research. The economic environment in international trade directly affects trade performance and the global market. The study analyzes the export performance of Indian textile exports and the macroeconomic factors influencing them from the perspective of export destinations. The study incorporates the key macroeconomic variables, including exchange rate, interest rate, Gross Domestic Product (GDP) per capita, the inflation rates of export destination countries, and crude oil prices. The study includes secondary data gathered on a monthly basis, employing the vector auto-regressive (VAR) model and the Granger causality test to analyze the dynamic linkages and causal relationships between the variables in the study. The Granger causality test results revealed that Japan’s and South Africa’s GDP (p < 0.05) impacts India’s textile exports to these countries. Additionally, the inflation in Japan (p < 0.05) affects the performance of Indian textile exports. The VAR model further revealed that the USA’s and China’s interest rate, Japan’s exchange rate, GDP, and interest rate, as well as South Africa’s GDP, significantly influence the export performance of Indian textiles.

The interplay between stock market performance and economic risk is a central concern in financial economics, as macroeconomic variables have a considerable impact on investment decisions and stock pricing. This relationship is particularly critical for bank stocks, as their performance is a key indicator of a country’s financial health. While extensive research has explored bank stock returns in developed economies, there exists a significant gap in understanding this dynamic within developing countries like India, particularly amid macroeconomic fluctuations underscored by the COVID-19 pandemic. Given the substantial investments in bank stocks by Indian investors, this study aims to examine the impact of macroeconomic factors on Indian bank stock returns. The study employs quarterly data from 2013–14 to 2022–23, with macroeconomic data sourced from the CMIE Economic Outlook and bank stock returns data obtained from the Bloomberg database. Using an Ordinary Least Squares regression model, the findings reveal that interest rate (β = 0.3069), inflation (β = 0.1644), GDP (β = 0.1928) and COVID-19 (β = 0.5737) exert significant positive effects on bank stock returns, while the exchange rate (β = –0.7440) has a substantial negative impact. The results highlight the sensitivity of bank stock returns to macroeconomic volatilities, with the pronounced impact of the COVID-19 pandemic further highlighting the effects of economic crises. The findings emphasize the need for incorporating these factors into the bank stock returns model, offering valuable insights for investors, banks, and financial regulators.

Acknowledgment
Aleena Joseph is a recipient of the Indian Council of Social Science Research Doctoral Fellowship. The article is largely an outcome of the doctoral work sponsored by ICSSR. However, the responsibility for the facts stated, opinions expressed, and the conclusions drawn is entirely that of the authors.

Investors invest in a foreign market to reap the benefits of currency differences. The change in the value of underlying assets affects these hedged funds and, at the same time, restricts investors from higher return possible in unhedged funds. This study aims to examine the performance of most actively traded shares in Exchange Traded Fund and any influence, along with tracking the information from the index. This study also analyzes the currency fluctuation and its impact on returns and volatility of ETF and index. The equity ETF, which tracks NASDAQ (NDX 100), is chosen for the study, and the data analysis is carried out using statistical methods such as correlation, regression, and GARCH model. The study utilizes the currency rate data from 2013 to 2018 of USD, GBP, and INR and examines its effect on the NDX (NASDAQ). The study emphasizes whether the ETF as a basket of securities is insensitive to currency rate fluctuations. It is found that the response of ETF to the currency movements is likely due to its underlying index. The study concludes that Motilal Oswal shares in NASDAQ 100 ETF are highly sensitive to the NDX 100 movements; thus, there is no direct impact between ETF and index performance through exchange rate fluctuation.

Type of the article: Research Article

Abstract
Promoters’ share pledging represents a serious corporate governance problem in highly concentrated ownership environments, with substantial implications for firms’ financial reporting integrity and investors’ interests. This study examines the relationship between share pledging and accounting conservatism while evaluating the effectiveness of SEBI’s 2019 disclosure mandate (Regulation 31(1)) in curbing opportunistic reporting. Utilizing a panel of 1,933 Indian non-financial firms from 2015 to 2022, we employ a fixed-effects model and a difference-in-differences framework to analyze an accrual-based proxy of conservatism. The empirical findings indicate a positive relationship between promoters’ pledging and the accrual-based proxy, with firm-level (FL_Pledge) and promoter-level (PL_Pledge) pledging coefficients of 0.072 (t = 5.72) and 0.044 (t = 6.43), respectively, confirming that pledging firms engage in less conservative reporting. The difference-in-differences analysis reveals that the 2019 regulatory change reduced opportunistic reporting, as evidenced by a significant negative interaction coefficient of –0.010 (t = –2.99). Furthermore, the results show that post-regulation, the treated group’s association with the accrual proxy remains positive at 0.014 (t = 3.16), suggesting a shift towards more conservative accounting practices following mandatory disclosure. These results indicate that India’s disclosure-led regulatory frameworks serve as an alternative to the restrictive pledging caps observed in other emerging economies.