A study on the impact of demonetization on Bombay stock exchange

Mangement

Demonetization is a monetary step in which a currency unit‘s status as a legal tender is declared invalid. On 10th November 2016, Indian Prime Minister declared that from today onward the Rs.500 and Rs.1000 denominated currency notes will not be legal tender. Indian economy is cash oriented economy because India has amongst the highest level of currencies in circulation at 12.1% of GDP. This has also been boosted by growth of high denomination notes, roughly 87% is in the form of Rs.500 and Rs1, 000 notes. The aim of demonstration was to curb the black money, corruption and terrorism .Indian economy is heavily dependent on cash as a result the country faced severe cash shortages with severe detrimental effects across the economy. This research paper aims to evaluate the impact of demonetization on sect oral indices of Bombay Stock Exchange. The collected data has been analyzed for the window period -15 to +15 from the announcement date. The result of the study finds that the cash dependent and consumption based sectors were negatively affected while the financial sectors were the biggest beneficiaries.

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