SEMI-STRONG FORM EFFICIENCY OF NIFTY 50 INDEX: AN EMPIRICAL TESTING IN RELATION TO RIGHTS ISSUE ANNOUNCEMENTS

Abstract

Stock price series is a wandering one. Investors put their money after analysing the behavior of the price using technical or fundamental analysis. The assumption behind these models is that the stock price behaviour is quite orderly and not random. Many researchers questioned this assumption and argued that the stock price behaviour is random. Efficient market hypothesis is explained in three levels. Weak form, semi-strong forma and strong form. With this background an attempt was made to anlayse the efficiency of the leading stock index in India i.e. Nifty 50 Index in weak-form in relation to rights issue. In this study rights issue of Nifty 50 companies announced during 2009-2018 were considered and event study methodology was applied to examine the randomness. The results of the study revealed that the Nifty 50 Index is not efficient in semi-strong form. KEY WORDS: Efficient Market hypothesis, Rights issue, event study, Nifty 50 index.