A Study of efficiency of Indian stock market

Abstract

Whether or not the markets are efficient has been investigated by the economists for a long time. Economists have investigated the phenomenon of price determination in different market settings like the monopoly, oligopoly, and perfect competition. One of the most important markets that have been studied by economists has been the perfect competition. Under perfect competition, market equilibrium ensures that prices of different markets do not deviate much from the equilibrium price and the new information is absorbed by the market as and when it is made available. Therefore, the prices in this market reflect all the available information and it is referred as Efficient Market Hypothesis (EMH) (Fama 1965, 1970). The development of the capital markets is changing the relevance and empirical validity of the EMH. The dynamism of capital markets determines the need for efficiency research. newline