Paper Details

Demonetization is the act of removing currency from the circulation. It is a method to manage black money in the economy by decreasing the cash circulation in the country that is directly related with the corruption. It directly or indirectly affects the various sectors. The effect of taking out so much money from the market is certainly influencing the various sectors in the economy that are driven by the black economy like real estate, construction, etc. But this step of the government has also influenced those sectors which are driven by cash transactions because they are the first businesses which are affected when suddenly so much money is stopped from circulation. This research paper is trying to analyze not only the impact of demonetization on Indian Stock Market but also emerging stock markets. Many countries have attempted demonetization, some successfully and some unsuccessfully, but all of them were done when their economics were having major problems like hyper inflation, these are varied opinions amongst economists on what the impact will be in future and whether it will impact the stock market rigorously. So the sample of the study has been drawn from the period of 30th October 2016 to 21st November 2016. This interested event study is the announcement of demonetization of all 500 and 1000 rupee notes by the Government of India on 8th November, 2016. The event study has chosen as -10 through zero to +10, where zero represents the demonetization date and -10, and +10 are the period before and after the announcement date. This paper focuses on an Event Study to analyze the stocks of global indexes. The result from the comparison of both pre and post-event study found that there is significant impact of demonetization on the global indexes.

Demonetization, Global Indexes, Event Study, Market Reaction.