Researchers have proved the influence of the American stock markets on their Indian counterparts during the IT boom. This paper tests these market-wide results on a stockspecific basis by analyzing the degree of covariance between the equity issued by the Indian firm Infosys on the Bombay Stock Exchange (Stock) and its American Depositary Shares (ADS) on the NASDAQ. The study finds that unlike the influence of the American bourses on the Indian markets, the Infosys ADS does not have an economically significant influence on the Stock. This supports the efficient market hypothesis. However, unlike current research which finds an absence of influence of the Indian markets on America’s, this study finds that the Infosys stock has a statistically and economically significant influence on its ADS. Thus, market-wide results cannot be extended to specific stocks without a separate analysis.
"INFOSYS: An Analysis of the Degree of Covariance Between the Firm’s Nationally Traded Stock and its American Depository (ADS),"
Undergraduate Economic Review:
1, Article 8.
Available at: http://digitalcommons.iwu.edu/uer/vol4/iss1/8