A Study on Semi-Strong form of Efficiency of Indian Stock Market

Abstract

The Efficient Market Hypothesis (EMH) plays a significant role in understanding the behavior of stock markets and investor decision-making. Among its three forms, the semi-strong form efficiency states that stock prices instantly and accurately reflect all publicly available information. This study examines the existence of semi-strong form efficiency in the Indian stock market by analyzing how stock prices react to public announcements such as quarterly earnings, bonus issues, stock splits, mergers, acquisitions, dividend declarations, and government policy changes. The research focuses on selected companies listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Using event study methodology and statistical techniques such as abnormal return analysis, correlation, and regression, the study evaluates whether investors can earn excess returns through publicly available information. The findings indicate that although the Indian stock market reacts rapidly to major information announcements, certain delays and inefficiencies still exist in some sectors and companies. The study concludes that the Indian stock market demonstrates partial semi-strong efficiency. Furthermore, technological advancements, increased investor awareness, and regulatory reforms by SEBI have improved market responsiveness over time. The research also discusses the practical implications for investors, policymakers, and financial analysts regarding information dissemination and investment strategies.