Understanding Market Efficiency Through Price Discovery Dynamics In Indian Stock Index

The research titled “Understanding Market Efficiency Through Price Discovery Dynamics in Indian Stock Indices” explore the price discovery dynamics in Indian stock market indices for the period 2020-2024, to understand market efficiency with a specific focus on the relationship between the macroeconomic factors and futures prices of stock indices such as Sensex. Price discovery is a critical process in financial markets, where asset prices adjust to reflect new information. By analysing how efficiently and quickly the Indian indices respond to market forces, this research aims to evaluate the extent of information flow and market integration. The study employs advanced econometric models such as the ‘Multiple Linear regression Model’ to assess the relationship between different macroeconomic variables with the Equity index. Additionally, it investigates the interplay between market participants and their roles in reflecting information into stock prices. By analysing these price discovery mechanisms, the study contributes to a deeper understanding of market efficiency in India’s emerging financial markets and provides insights for investors, regulators, and academics. The findings will aid in assessing the robustness of the market’s response to new information and enhance predictive models for future price trends in the stock indices.