Published Online:July 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP200725
DOI:10.71329/IUPJARAP/2025.24.3.408-431
Author Name:Abhay Kumar, Arshi Shah, Dhruv Shetty and Priyal Mehta
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:408-431
This paper tests the efficient market hypothesis (EMH) in the Indian chemical industry by analyzing its weak, semi-strong and strong forms. Stock prices of five prominent companies (Pidilite Industries, SRF Ltd., Deepak Nitrite, Godrej Industries and Castrol India) were analyzed from March 2, 2020 to February 28, 2025. The runs test for weak-form efficiency found all p-values above 0.05, confirming that stock price movements are random, eliminating profitable patterns from historical data. For semi-strong form, event studies on Pidilite (stock split), SRF (rights issue), Deepak Nitrite (dividend), Godrej Industries (buyback) and Castrol (bonus issue) showed immediate and complete stock price reactions, supporting the hypothesis that markets rapidly absorb public information. Strong form was tested using selected mutual funds (ICICI Prudential Commodities, Axis Focused, ICICI Prudential Smallcap and Tata Resources & Energy). Their performance revealed no persistent excess returns, reinforcing that even insider information does not guarantee an advantage. Overall, the findings affirm market efficiency across different informational levels, offering key insights into price behavior in emerging markets.
Financial markets serve as the backbone of economic growth, facilitating capital allocation and investment across industries (Elangovan et al., 2022).