In spite of headwinds faced on account of a slowly global economy, Indias GDP is

amongst the highest in the world at 7.6% which shows that India is on right track. The
GDP of any country is the index of their growth of economic development where capital
market of the country plays a vital role in it. The intensification of capital market can be
judged through trading volume and stock market returns because that possesses the
explanatory power to provide a transparent map of the capital market. In the capital market
stock market returns and volume of trade is under the emphasis of systematic risk. As a result
more volatility in the stock market has been seen which affects stock returns and volume of
trading in the stock market. Therefore Investors, policy makers, portfolio managers, brokers,
academicians and regulators are intensively focused upon understanding the reasons for the
volatility in stock returns and its relationship to trading volume.
Volatility in the stock market has been arising due to sentiments and emotions of the
investors. Moreover Countrys depression, Recession and boom bring more volatility in the
stock market which cannot be cured in the short span of time. Political turmoil or
instability made negative impact on stock market which spurs volatility.
Volatility in the stock market arises due to Global cues on the account of
LPG. If the global cues are positive then stock market Index showed a
bullish trend which ultimately lead to increase the volume of trading and
stock returns in the stock market.
Technical and Fundamental analysis of the specific stock affects the
volatility in the stock market. Under the technical indicators investor look after the
moving average, Relative strength of index and breadth of the market before investing in the
stock for day to day trading . If the relative strength index crosses 73% then one should sell
the stock instead of buying. The long term investors however consider the fundamental
analysis along with technical indicators before investment. With the help of fundamental
analysis investors can find out the intrinsic value of the stock and do the investment
accordingly. For example if the intrinsic value of the stock is undervalued then the volume of
trade and stock returns in that stock is more and one can buy the stock.
The market was more volatile on the particular day or an event in the
economy on the account of news or any other information. Recently the
sensex was down by 700 points when finance minster of India was
presenting his third Union budget for fiscal year 2016-17 on leap date 29th
Feb 2016.
Moreover the Fama gave a concept of Random walk theory to understand the stock returns
and volume of trade in the specific stock in the stock market. Now the investors are more
conscious about their investments because they believe in efficient frontier which states that
selecting those stocks which gave maximum returns with low level of risk. Earlier investors

believed in the traditional concept of portfolio but now they follow Modern concept of
portfolio. Due to these reasons more volatility has been seen in volume of trading and stock
returns.