How Relevant Are Political And Economic Events To The Indian Stock Market

Abstract

- Indian stock market has been witnessing numerous uncontrollable events impacting the stock index in positive or negative way for a long or short timeframe. The market has a characteristic to react to available information, whether it is related directly or indirectly. The most appropriate way to study this feature of market is through event study methodology. The aim of the paper is to study the relevance of extraneous episodes using event study and Mean Adjusted Return Model. The study analyses pre and post event scenario of abnormal returns generated in the stock market over four windows: 2-day, 5-day, 20-day and 30-day windows. The findings stipulate that such events have significant impact on the stock market and the market does not absorb information easily. Thus, the events majorly have a long term impact on the stock market.