Empirical Testing of Capital Market Efficiency Evidence from Indian Market

Abstract

Capital Market is called as an Institutional arrangement which smooth the progress of lending and borrowing of long term funds. The efficient capital market mobilizes the public savings, makes finance available at a reasonable rate to those who are in need of it and promotes the efficiency through growth. It facilitates the long term funds to the Industrial and Commercial Enterprises which want to make investments in new capital issues and cater to the needs of the wide range of people which leads to the social and economic development of a country newlineThe efficient market hypothesis is deeply concerned with the behaviour of prices in asset markets. The term efficient market was initially applied just to the stock market but the concept was rapidly generalised to other asset markets. There are three common forms in which the efficient market hypothesis is commonly stated weak form efficiency, semi-strong form efficiency and strong form efficiency, each of which have different implications for how markets work. newlineThe main aim is to study the relevance of efficiency market hypothesis theory in Indian capital Market taking into consideration all three forms of market efficiency together. In order to achieve the research objectives, null hypotheses have been formulated and relevant statistical techniques such as linear and multiple regression analysis, correlation analysis, confirmatory and exploratory factor analysis and descriptive statistics have been applied using software MS Excel, E-views, R- software and SPSS 20. newline