A Study on Efficient Market Hypothesis of Sel...

A Study on Efficient Market Hypothesis of Selected Stocks Listed in NSE

Author Name : Mr. Vishwanath M. Desai, Dr. Mangala Nayak Yaragatti

ABSTRACT Market efficiency refers to the accuracy and quickness with which prices reflect market related information. In the weak form of the market, current price reflect all the information found in past prices and traded volumes. Further, prices cannot be predicted by analysis of past prices. Everyone has access to past prices even though some people can get these more easily than others. Liquidity traders may sell their stocks without considering the intrinsic value of the shares and cause price fluctuations. Buying and selling of the information traders lead the market price to align itself with the intrinsic value. The filter rule, runs test and serial correlation are adopted to find out market efficiency. The present study examines the weak form market efficiency of Indian Stock market. In weak form of market, Current price reflect all the information found in the past price. So the future price of Security cannot be predicted by analyzing past share price data. The present paper discuss the concept efficient Market Hypothesis and also literature available on the same. By taking 10 securities listed On National Stock Exchange (NSE) from transport and logistics sector and runs test is applied to judge the weak form market efficiency of Indian stock market. From the study it is found that the relationship between past stock price of sample companies and their future stock price is very meager. This shows that price change are random and market is efficient in weak form.