A Study on Algorithmic Trading Strategies and Their Impact on Financial Markets: Evidence from the Indian Securities Market

Algorithmic trading has emerged as a dominant force in modern financial markets, reshaping how securities are traded and how prices are discovered. The Indian securities market, characterized by rapid technological adoption and growing participation from domestic and foreign investors, has witnessed significant growth in algorithmic trading since its formal introduction in 2008. This research paper examines various algorithmic trading strategies, their operational mechanisms, and their impact on market quality indicators such as liquidity, volatility, price discovery, and market efficiency within the Indian context. Using secondary data from the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and reports published by the Securities and Exchange Board of India (SEBI), the study employs descriptive and analytical methods to evaluate trends and implications. The findings suggest that algorithmic trading has enhanced liquidity and efficiency while reducing transaction costs. However, concerns related to short-term volatility, systemic risk, and market fairness persist. The study concludes by emphasizing the importance of robust regulatory frameworks to balance innovation with financial stability.