Mishra and Pradhan (2009) tested the weak form of efficiency in Indian capital market keeping in view the

perspective of financial innovations. The results of their research showed that Indian capital market is weak form inefficient showing that stocks do not follow random walk in India. The inefficiency of the weak form provides opportunities to the traders to earn supernormal profits which in turn can provide stimulus to market participants to innovate new financial products. And when the financial innovations appear in the market, they generate greater efficiency in the allocation of the risk. Moreover, boom in the financial market generates efficiency in the allocation of the capital, lowers the cost of capital and contribute to economic growth. But if the financial innovation goes wrong it can have serious impact over the financial markets. Flawed financial innovation led to the global financial crisis as there was no transparency in the product creation, no one knew how the financial products were created and moreover rating agencies did a terrible job. Ramasatri (2001) studied the efficiency of the Indian stock market using spectral analysis. This paper tested the weak form of efficiency after the period of the stock market reforms came into existence and moreover SEBI was strengthened & online trading was introduced ,i.e., during 1996-98. The results of the paper showed that the daily sensex returns series were random and the spectral analysis indicates that there is a presence of periodic cycles in the movement of share prices, which does not support the weak form of efficient market hypothesis. Mishra (2010) examined the informational efficiency of the Indian stock market taking into consideration data of BSE for period of 18 years spanning from 1991 to 2009. This paper revisits the Efficient Market Hypothesis and came to the conclusion that Indian stock market is inefficient in weak form of hypothesis. And it may be due to the stock market anomalies and stock market volatility. Moreover this paper states that market inefficiency is an indicative of sub-optimal allocation of portfolios into capital market of India. Pandey (2003) carried out a study on the efficiency of Indian stock market and took into consideration the data of three stock indices .i.e., CNXdefty, CNX Nifty & CNX Nifty Junior from the period of 1996 to 2002. The results of this paper conclude Indian stock market is inefficient. Thus stating that there are undervalued securities in the market from which the investors can earn abnormal profits. The tests of auto correlation and run test concludes that the

series of stock indices are random time series. And the auto correlation analysis clearly indicates that share price does not confirm the applicability of the random walk model in India.

Mishra, P. K. and Pradhan B. B. (2009), Capital Market Efficiency and Financial Innovation A Perspective Analysis, The Research Network, Vol. 4, No. 1. Ramasatri, A.S. (2001), Stock Market Efficiency Spectral Analysis, Finance India, Vol. XV, No. 3. Mishra, P.K. (2010), Indian Capital Market Revisiting Market Efficiency. Pandey, A. (2003), Efficiency of Indian Stock Market.