Behavioural Forensics: Revelations from CNX Nifty Analysis

Abstract

Economic growth and sustainable development in financial markets are only possible when the firms show robustness and stability through the ethical way of business. However, it has been observed that certain firms take incorrect measures while running their business. This work attempts to detect threads of possible financial frauds by Didier Sornette’s drawdown approach. Select CNX Nifty 50 Mid Cap stocks are shown here as samples. Drawdown approach identifies the breakpoints and clearly detects the dates and could be linked to the anchoring and herding behaviour in certain cases. Apart from that, other financial or strategic events could be linked as well. Qualified institutional buyers and large institutional investors can use this method as a corporate governance crosscheck, from an entirely different standpoint.