INTRODUCTION:

Stock market is something where you can never foretell what is

going to happen in the market. You might get huge gain or incur
losses when the stock market crashes. The two prominent Indian
market indexes are Sensex and Nifty. Sensex is the oldest market index for
equities; it includes shares of 30 firms listed on the BSE, which represent
about 45% of the index's free-float market capitalization. It was created in
1986 and provides time series data from April 1979, onward. Share price is
an indicator about the health of the company. Increased profits, for
example, will drive the stock price up; excessive debt, for example, will
drive it down.

The share price has a profound effect on the company overall: for
example, a declining share price will make it hard to secure credit, attract
further investors, build partnerships, etc. Also, when employees are often
holding stock options, a declining share price can severely dampen
morale. In an extreme case, if the share price plummets too far, the
company can be delisted from the stock market.

There are a larger number of factors that effect stock price. One of the
major factors affecting stock price is demand and supply. The
trend of the stock market trading directly affects the price. When
people are buying more stocks, then the price of that particular
stock increases. On the other hand if people are selling more
stocks, then the price of that stock falls. So, you should be very
careful when you decide to invest in the Indian stock market. In
this study we are trying to analyse the factors that effect to
change in share price which lead us to the research question i.e.
effect of demonetisation on Share price

LITERATURE REVIEW:

William O. Browna,1, Dayong Huang a,, Fang Wang(Inflation

illusion and stock returns) In the article author suggests that the value of stocks is
highly influenced by inflation illusion . The article measure the magnitude of inflation-
illusion-related mispricing at the stock level via how the earnings yield of each stock relates
to inflation. The ensuing inflation illusion factor is shown to be useful in explaining returns of
portfolios formed on asset growth, the book-to-market ratio, and investment. The results are
qualitatively robust to the controls of various firm characteristics, such as the book-to-market
ratio, asset growth.

Tibebe A. Assefaa,, Omar A. Esqueda b, Andr Varella Mollick(Stock returns and interest
rates around the World)The article examine quarterly stock returns of 21 developed and 19
developing economies from 1999 to 2013. , we find statistically significant negative effects
of interest rates on stock returns in the developed countries, consistent with the expected cash
flow hypothesis. In the developing markets, we find statistically significant negative effects
of interest rates on stock returns in the developed countries, consistent with the expected cash
flow hypothesis. The contrasting effect of interest rates change on stock returns can be
partially attributed to differing monetary policies and to the more mature capital markets
inherent in developed economies.

Chung-Rou Fang , Shih-Yi You(The impact of oil price shocks on the large emerging
countries' stock prices: Evidence from China, India and Russia
) This article investigates how explicit structural shocks that characterize the endogenous
character of changes in oil prices affect three large NIEs' stock-market returns we find that
the impact of oil price shocks on the three large NIEs' stock prices has been mixed. Firstly, as
long as the oil price is not driven by the increasing oil consumption of India, the oil prices
always have a negative impact on India's economy.

Amado Peir(Stock prices and macroeconomic factors: This paper analyses the dependence
of stock prices on macroeconomic variables. Stock prices anticipate movements in production
one year in advance but move simultaneously with interest rates. Future changes in industrial
production and current changes in long-term interest rates account for approximately one half
of stock returns.

RESEARCH QUESTION:

Effect of demonitization on stock price

RESEARCH METHODOLOGY