Trauma-Informed Leadership - Five Practical Principles
Testing Semi strong form efficiency on Indian Stock market with reference to Bonus shares.pptx
1. TESTING SEMI STRONG FORM OF
EFFICIENCY IN INDIAN STOCK
MARKET WITH SPECIAL REFERENCE
TO BONUS SHARES
2. Introduction
• Weak Form of Efficiency: Weak form efficiency claims that
past price movements, volume and earnings data do not
affect a stock’s price and can’t be used to predict its future
direction.
• Semi Strong Form of Efficiency: Semi-strong form efficiency
is an aspect of the Efficient Market Hypothesis (EMH) that
assumes that current stock prices adjust rapidly to the
release of all new public information.
• Strong Form of Efficiency: Strong form efficiency is the
strongest version of market efficiency and states that all
information in a market, whether public or private, is
accounted for in a stock's price.
3. Objectives
• To know the impact of new information
(bonus issues) on share prices and how it
adjusts itself after the issue.
• To investigate whether the Indian stock
market is semi-strong form efficient or not.
4. Company Profile
• SIC STOCKS AND SERVICES are the global provider of
technology based financial services, backed by industry
leading technology and security. And their technology has
been utilized all over the world for the investment
solutions.
• SIC Stock is a Mumbai based broking company which is
registered with BSE in 2014 and with NSE in 2008. They
operate at equity cash market, Derivatives and currency
future market segments. Their services also includes demat
services, research sciences and distribution of financial
products like mutual funds, IPOs amongst others. They have
a membership in Equity cash and derivatives from BSE and
Equity cash with NSE.
5. DATA ANALYSIS
Companies T-test F-Test
INFY 3,7,15 has no Sig difference there is no significant difference between the variance.
Mindtree
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
TCS 3,7,30 has no Sig difference there is no significant difference between the variance.
Tech mahindra
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Excel 3 & 7 has no Sig difference 3 & 30 has no Sig difference
HCL
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
ABM International
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Kothari products
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
MMTC 7,15&30 has no Sig difference there is no significant difference between the variance.
BPCL 3,7 & 30 has no Sig difference there is no significant difference between the variance.
HPCL
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
IOCL 3,7 & 15 has No Sig Difference 7,15 & 30 has no Sig Difference
Reliance
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Auropharma 30, 15 & 7 has No sig difference there is no significant difference between the variance.
Biocon
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Brittania 3,7 & 15 has No Sig Difference there is no significant difference between the variance.
Emami 30 & 15 has No sig difference there is no significant difference between the variance.
Godrej 30, 15 & 7 has No sig difference there is no significant difference between the variance.
Hatsun 30 has No sig difference there is no significant difference between the variance.
Grindwell 3,15 & 30 has no sig difference there is no significant difference between the variance.
BHEL
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Igarashi
There is no sig difference between the variance of pre and post
window. 3 & 30 has no Sig Difference
Jyothi lab 3 has No sig difference there is no significant difference between the variance.
Federal bank 30 has No sig difference there is no significant difference between the variance.
ICICI
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
V-guard
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Karur vysya
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Kotak bank 30 has No sig difference there is no significant difference between the variance.
Wabag 3 & 7 has No Sig Difference there is no significant difference between the variance.
Mothersumi
There is no sig difference between the variance of pre and post
window. there is no significant difference between the variance.
Aarti drug 3 & 30 has no Sig difference there is no significant difference between the variance.
UCO bank 7 & 15 has No Sig Difference there is no significant difference between the variance.
CUB 3,7 & 15 has No Sig Difference there is no significant difference between the variance.
6. Major Findings
Following company have showed there is no Significant difference in both
F test and T-Test post and pre window (3 to -3, 7 to -7, 15 to -15 and
30 to -30)
• Mindtree
• Tech mahindra
• HCL
• ABM International
• Kothari products
• HPCL
• Reliance
• Biocon
• BHEL
• ICICI
• V-guard
• Karur vysya
• Mothersumi
7. Suggestions
• Shareholders: This study indicates that the stock does not yield any positive or negative
abnormal returns, thus the shareholder’s wealth remains the same irrespective of the bonus
shares. According to this study, since the stock returns drop on the day of issue, the investors
might as well sell their shares a day before or a week before the event i.e. the bonus
announcement and wait until the returns get normal to buy back their shares, thus playing safe
• Traders: It has been found that the Bonus shares increases the liquidity (a nominal) of shares in
the market. Hence there is an increase in buying or selling of shares which is favorable for the
traders as they act as intermediaries.
• Retail Investors: The results of the investigation can also be used by the investors to decide upon
the timing of their investment while dealing with the stocks going for the split.
• According to this study, since the stock returns drop on the day of bonus issue, the investors
might as well sell their shares a day or week before the split and wait until the returns get
normal to buy back their shares, thus playing safe.
• Fund Managers: The fund managers can use this event information for trading of funds which
have not been blocked for investment.
• Foreign Institutional Investors (FII’s): This study presents empirical evidence that the stock does
not yield any abnormal returns and the liquidity does not prove beneficial to a great extent.
Therefore, the price performance of the share depends on the state of the market and the
fundamentals of the company once the transients settle down or it could be because of
information asymmetry in the stock market. The investors should look at the fundamentals and
corporate actions taken by the company before taking a position immediately after a Bonus
issue.
8. Conclusion
• The current study was conducted to find the
impact of Bonus share announcement and its
impact on stock prices, the stocks are taken for
thirty days i.e. -1 to -30 before the
announcement and 1 to 30 after announcement
and 0 (zero) taken as event day for 33 companies
listed at NSE for the period of 2015 to 2018.
Conducted t-test with the 5 % significance level
for the purpose to know the market efficiency
form, from this we can infer that the markets are
efficient semi strong efficient.