The methodology

Sanjiv Sankaran

THE objective of the study was to measure the strength of the association between the badla turnover and stock price. Thus, the statistical tool of correlation was used.

The period covered was from January 1999 to August 2000. The 20 months cover three distinct phases. Early 1999 witnessed the market indices moving in a narrow band, seemingly searching for a direction. March 1999 started a sharp uptrend -- a phase that peaked in early 2000. Subsequently, from around March, the indices fell sharply.

The three phases, thus, covered a lacklustre period, a bull phase and a crash.

The badla turnover pertains to the turnover recorded by the sample companies in the weekly badla session conducted on the Bombay Stock Exchange (BSE). The stock prices pertain to the weekend rates of the following week. That is, if the badla price pertains to November 11, the stock price would be that of the subsequent Friday, November 17.

The subsequent week's stock price was taken because the study was based on the assumption that one week's badla session takes into account events that are likely to affect stock prices in the near future.