Impact of Demonetization Process on the Performance of Nifty

Abstract

This paper investigates the impact of demonetization process on the performance of Nifty 50 and its Sectorial Indices. The study uses data of closing prices from 28 June 2016 up to 20 March 2017. The study employs descriptive statistics, paired sample T test and ANOVA to evaluate the impact of demonetization process on the performance of Nifty 50 and its Sectorial Indices. It has found that there is statistical significance at the level of 5% that Nifty 50 dropped after the demonetization event as compared to the pre demonetization event. Further, the results reveal that most of Sectorial Indices of Nifty 50 sloped downward post demonetization event and the significance of the statistical results are varied from one sector to another. It is recommended that periodic review of the policy should be made to iron out the negative impacts of demonetization. Also, it is imperative to evaluate the impact of demonetization on the short, medium, and long run to avoid any grey areas for any future policy regarding cashless economy or demonetization.