Study on the Impact of Price Changes and Trading Volume on the Investment Performance of Sovereign Gold Bonds in the Indian Stock Exchange

Abstract

Sovereign Gold Bonds (SGBs), introduced by the Government of India and issued by the Reserve Bank of India, constitute a notable financial instrument designed to reduce reliance on physical gold while providing investors with a secure, interest-bearing alternative linked to gold prices and traded in secondary markets for enhanced price discovery. The study investigates the impact of price changes and trading volume on the investment performance of Sovereign Gold Bonds (SGBs) in the Indian secondary market. Using 200 observations from the National Stock Exchange and Bombay Stock Exchange, the analysis applies descriptive statistics and correlation techniques to evaluate volatility, return behavior, and liquidity. Results reveal that absolute price changes (CHNG) are highly volatile with a mean of 43.75 and a large standard deviation of 101.96, while percentage returns (%CHNG) are relatively stable, averaging 2.52% with lower variability (SD = 1.51). Trading volume shows extreme inconsistency, with a mean of 68.65 and wide dispersion (SD = 213.45), reflecting irregular liquidity. Correlation analysis indicates a weak but significant negative relationship between trading volume and percentage change (r = −0.221, p = 0.002), and a moderate positive relationship between trading volume and absolute price change (r = 0.535, p = 0.000). These findings suggest that while SGBs provide stable percentage returns and government-backed security, they remain subject to volatility in absolute price movements and limited liquidity, making them more suitable for long-term conservative investors than short-term speculative trading.