AN ESSAY ON THE MARKET EFFICIENCY AND INFORMATION ASYMMETRY IN INDIAN REAL ESTATE SECTOR: THE IMPACT OF DEMONETIZATION

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The Government of India on 8th November 2016 announced demonetization of all 500 and 1000 rupee notes which had adversely affected the Indian economy to some extent. This paper elucidates the impact of such a move on the availability of credit, spending, and level of activity in the Real Estate sector of the country. The investors’ decisions to buy or sell the shares are purely based on the information available to them about the share price volatility. The market in which the share prices always reflect all the available information to investors is known as an efficient market. This study is mainly based on the efficient market hypothesis using the closing price data of 5 Real estate companies for one year. The statistical tool used for analysis is the Market model because using this model the intrinsic value of shares and risks are measured by stock’s price volatility. It was found that the market efficiency of the real estate companies are difficult, apart from the event window considered, it shows an information asymmetry for the last 1 year that is mainly before declaring demonetization.

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