International Journal of Latest Technology in Engineering, Management & Applied Science (IJLTEMAS) Volume V, Issue XI, November 2016 | ISSN 2278-2540 www.ijltemas.in Page 48 “Efficiency of Indian Stock Market: A Study from National Stock Exchange” Prof. Mrityunjaya B Chavannavar 1 , Poonam V. Patel 2 1 Assistant Professor, Chetan Business School, Hubli. 2 MBA Final Year, Chetan Business School, Hubli. Abstract: The efficient market theory states that the share price fluctuations are random and do not follow any regular pattern. Mean while technical analysts see meaningful patterns in their charts. Hence the question arises that whether investors can predict future share prices and gives an opportunity for earnings ? Many studies of the market analysts have proved the weak form of the EMH. The type of information used in weak form of Efficient Market Hypothesis is the historical prices. Everyone has access to the past prices; even though, some people can get those more conveniently than others. Informational efficiency is the measure of swiftness with which the market reacts to new information in the form of economic reports, company analyses, political statements and notification of the Industrial policy. The Semi strong form of the efficient market hypothesis states that the security price adjusts rapidly to all publicly available information like earnings of corporate, dividend, bonus, stock splits so on. The study analyses whether current security prices reflect all the historical information, whether future prices can be predicting by analyzing past prices and whether all public information is reflected in the security prices? The study on Market efficiency is conducted for NSE 50 stocks and Nifty for the period of 3 years. From the study it is understood that Indian Stock Markets are efficient in Both Weak & Semi-strong form. I. INTRODUCTION he Indian equity markets performed remarkably well in last few years, supported by improved conditions in the global financial markets. During this period, there was a rise in the inflows of foreign capital and increased trading activity in equity markets. With increased movement of investments across international boundaries owing to the integration of world economies, the understanding of efficiency of the emerging markets is also gaining greater importance. Hypothesis of Market Efficiency is an important concept for the investors who wish to hold diversified portfolios. The expectations of the investors regarding the future cash flows are translated or reflected on the share prices. The accuracy and the quickness in which the market translates the expectation into prices are termed as market efficiency. By efficient market we mean a market in which share prices follow an independent path, this happens because of the presence of several macro and micro factors contributing towards the efficiency. In an efficient market each price of a share is independent of the previous price. The type of information used in weak form of Efficient Market Hypothesis is the historical prices. Everyone has access to the past prices, even though some people can get those more conveniently than others. Many studies of the market analysts have proved the weak form of the EMH. The Semi strong form of the efficient market hypothesis states that the security price adjusts rapidly to all publicly available information like earnings of corporate, dividend, bonus, stock splits so on. The abnormal returns are calculated using residual analysis. This study is based on the daily closing price of NIFTY 50 index and 50 stocks obtained from NSE for the period of 3 years that is from 1 st April 2013 to 31 st March 2016. In order to test weak form of market efficiency Auto correlation test and run test has been conducted. The Run test is conducted to test the weak form of efficient market hypothesis. The Residual return on event study is conducted to examine the Semi strong form of efficient market hypothesis and the security returns are regressed against the returns on market index. II. LITERATURE REVIEW According to Fama (1970) the concept of efficient market is concerned with the adjustment of security prices to three relevant information‟s. First, weak form tests, in which the information is of historical prices, then semi-strong form tests, in which the prices adjust to other information that is publicly available, finally, strong form tests were all information is reflected. E. Dockery and M. G. Kavussanos (1995) they tested unit root tests using panel data to investigate the efficiency of the Athens stock market for a total 73 companies out of possible 150 companies listed on Athens stock exchange from February 1988 to October 1994 and the it is noticed that there was no evidence of random walk and the null hypothesis was rejected. Rakesh Gupta and Parikshit Basu (2007) conducted a test for weak form of efficiency on NSE and BSE from 1991 to 2006. The evidence suggests that the series do not follow random walk model and there is an evidence of autocorrelation in both markets rejecting the weak form efficiency hypothesis. Richard Osayuwu (2010) T