Assistant Professor, School of Commerce and Management, Sri Guru Granth Sahib World University, Fatehgarh Sahib, Punjab, India
Online published on 3 February, 2020.
An announcement of demonetization was not less than a big surprise, provides an opportunity to test its effects on the economy and also derive more general insights into the phenomena of corruption and tax evasion. In this paper, an event study was conducted to analyze the reactions of stock market after the announcement of demonetization on November 8, 2016.
The present study covers the period of week before and after demonetization from November 1, 2016 to November 7, 2016 and November 9, 2016 to November 16, 2016. The monthly data was used for the period of October 10, 2016 to November 7, 2016 and November 9, 2016 to December 8, 2016. The high volatility and negative impact of demonetization was found on the closing prices of BSE Sensex and NSE Nifty with weekly data. No doubt, demonetization has put negative impact on the stock prices of BSE S& P Sensex and NSE S&P Nifty midcap, but this impact was higher in the short period as compared to long period.
Demonetization, BSE Sensex, NSE Nifty, t-test, Volatility
