Impact of Demonetisation on Indian Stock Market: With Special Reference to Sectoral Indices in National Stock Exchange of India

Abstract

Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency. To change this practice of cash circulation a sudden move has taken by our honorable Prime Minister Mr. Modi on November 8, 2016 regarding demonetization of two highest currency denominations of our country. The Government of India announced the demonetization of all 500 and 1,000 banknotes. This move is taken to support cashless economy & to put a check on black currency in our circulation. This incidence impacted almost all the sectors of our economy. That day biggest fall was observed in Indian equity market in comparison to other Asian market. Apart of this there was a down ward trend observed in almost all the sectoral indices. It means all the sectors got affected by demonetization process. The main objective of this paper is to know the Impact of Demonetization on Indian Stock Market. The secondary data was mainly collected from RBI’s web site and nseindia.com. This study covers a period of only 15days, 7 days, 5 days and 3 days before and after 8-november-2016. We used Pair sample t-test and regression to analyze the data.