Journal of Commerce and Accounting Research

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Informational Content of Indian Demonetisation for Sectoral Indices


Affiliations
1 Assistant Professor, Faculty of Management Studies, University of Delhi, New Delhi, India
2 Assistant Professor of Commerce, Department of Commerce, Shri Ram College of Commerce, Delhi, India
     

   Subscribe/Renew Journal


The present work tries to study the degree and direction of the impact of the demonetisation move of the Central Government in India announced on the eve of November 8, 2016 on various sectors of Indian economy proxied by their barometers in the stock markets of the country. Using event study methodology with parametric and non-parametric testing, it was observed that the impact of demonetisation of High Denomination Currency Notes (HDCNs) was not evenly distributed in the Indian economy. As intended, the move had a foremost impact on the Reality sector which experienced the highest fall of over 12% on the next trading day after the announcement among all the 41 sectors studied in this article. While the IT sector and two business houses could recover to the early losses, few vital sectors succumbed to the overall negative sentiment. These sectors, Food & Agro-Based Products, FMCG, Textiles, Small Cap 50 and India Manufacturing, have larger ramifications for the informal sector of Indian economy affecting employment, sustenance and economic activities.

Keywords

Demonetisation, Sectoral Index, Event Study.

JEL Classification: E42, E44.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Indian Banknote Demonetisation. (2017, July 15). Retrieved from Wikipedia: https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation

  • Aggarwal, N., & Narayanan, S. (2017). Impact of India’s Demonetization on Domestic Agricultural Markets. doi:https://dx.doi.org/10.2139/ssrn.3066042

  • Bharadwaj, R., Mohith, S., Pavithra, S., & Ananth, A. (2017). Impact of demonetisation on Indian stock market. International Journal of Management, 8(3), 75-82.

  • BSE. (2017, July 15). Retrieved from http://www.bseindia.com

  • Chellasamy, P., & Anu, K. M. (2017). Impact of demonetisation on Indian stock market: With special reference to sectoral indices in Naional Stock Exchange of India. IOSR Journal of Economics and Finance, 8(3), 51-54.

  • Ghosh, J., Chandrasekhar, C. P., & Patnaik, P. (2017). Demonetisation decoded: A critique of India’s currency experiment. Routledge.

  • MacKinlay, A. C. (1997). Event studies in economics and finance. Journal of Economic Literature, 35(1), 13-39.

  • Narain, & Rani, A. (2017). The stability of Indian stock market after demonetisation. Business Analyst, 27(2), 39-56.

  • NSE. (2017, July 15). Retrieved from http://nseindia.com

  • Padmavathy, S., Umashankar, M., & Indhu, V. (2017). Share price behaviour around demonetization. International Journal of Management Research & Review, 7(6), 665-673.

  • Ramakumar, R. (2018). Note-Bandi: Demonetisation and India’s elusive chase for black money. Oxford: Oxford University Press.

  • Sunil, T., & Shenoy, S. V. (2017). Impact of demonetization on stocks of selected sectors - An event study. International Journal of Research in Finance and Marketing, 7(5), 29-38.


Abstract Views: 237

PDF Views: 0




  • Informational Content of Indian Demonetisation for Sectoral Indices

Abstract Views: 237  |  PDF Views: 0

Authors

Narain
Assistant Professor, Faculty of Management Studies, University of Delhi, New Delhi, India
Asha Rani
Assistant Professor of Commerce, Department of Commerce, Shri Ram College of Commerce, Delhi, India

Abstract


The present work tries to study the degree and direction of the impact of the demonetisation move of the Central Government in India announced on the eve of November 8, 2016 on various sectors of Indian economy proxied by their barometers in the stock markets of the country. Using event study methodology with parametric and non-parametric testing, it was observed that the impact of demonetisation of High Denomination Currency Notes (HDCNs) was not evenly distributed in the Indian economy. As intended, the move had a foremost impact on the Reality sector which experienced the highest fall of over 12% on the next trading day after the announcement among all the 41 sectors studied in this article. While the IT sector and two business houses could recover to the early losses, few vital sectors succumbed to the overall negative sentiment. These sectors, Food & Agro-Based Products, FMCG, Textiles, Small Cap 50 and India Manufacturing, have larger ramifications for the informal sector of Indian economy affecting employment, sustenance and economic activities.

Keywords


Demonetisation, Sectoral Index, Event Study.

JEL Classification: E42, E44.

References