Do government policies impact the stock market returns? Empirical evidence from the Indian solar energy sector

Abstract

This study aims to examine the impact of ambitious projects of “Pradhanmantri Suryodaya Yojana (PSY)” on ten stocks of the energy sector listed in the NSE. We examine the hypothesis using the standard event study methodology, for which we extract the data from the official website of the National Stock Exchange (NSE). We found that the announcement of the project did not significantly affect the stock price during the event window, except third trading day after the event, whereas there was a significant effect on stock prices in the post-event window. This is the first study, to the best of our knowledge, that examines the impact of the news announcement of “PSY”. It will be helpful for the researchers working in the area of event study, policy makers, investors, and corporate firms as well, because this article bridges the gap in policy decisions on energy sectors and stock reactions. This study includes the stocks listed in the NSE only, but the inclusion of more stocks can alter the results.