Buyback of Shares

INTRODUCTION

A project in a brokerage firm enables one to not only understand the working of a financial institution associated with the stock market but also provides one with an opportunity of knowing the why and how of making right investments in Indian context which are the key drivers for propelling its growth.

Research Problem:

Efficient Market Hypothesis states that it is impossible to beat the market because the stock market efficiency causes the stock prices to incorporate and reflect all the new information in the stock prices. We want to study whether the markets are efficient when the buyback policy is announced by the corporate. There are certain issues which are to be focused upon. They are:

·         To find out any relation between corporate buyback policy and market value of a company.

·         To analyze the effect of corporate buyback decisions in terms of creating abnormality in the price and volume of the company.

·         To check whether the markets are efficient when any news about buyback decisions of a company is received.

Objective

·         To explore the insight of a corporate event named “BUYBACK OF SHARES” which drags lot of attention and results into many drastic changes in the market valuation of the firm.

·         To study the impact of “Buyback” on the price and volume before and after such buyback is announced.

·         To check whether abnormality exists in the price and volume of the share as the “buyback” is announced.

·         To find out the room for leakage of any insider information about “buyback” of a company.

·         To check whether any insider information plays any part in abnormal trading effect and abnormal price effect in a script.

·         To analyze the bearing of such abnormality (if it does exist) on the market capitalization and volumes traded on the stock market a month before the Announcement Date and a month after the buyback date for all the scripts under the study.

·         To measure the cumulative impact of “Corporate Buyback Policy” and try to conceive a general trend based on it.