The main objective of the present study is to examine the stock market reaction towards the announcement of demonetization in India in short term. To meet this objective the researcher collected secondary data from various data centers like, yahoofinace.com, reports of selected stock exchange, articles and magazines. For the purpose of the study two leading Indian stock exchanges, NSE and BSE have been selected. The total 20 days SENSEX were used, out of which 10 days pre and 10 days post announcement of demonetization. The statistical tools like Percentage, Average, SD and Paired T test have been employed for analysis of the data. Finally the study reveals that, in both NSE and BSE stock indices are negatively reacted towards the announcement of demonetization in short term. However, post demonetization, the scenario was quite different in the stock market.

KEYWORDS: Demonetization, Stock Market, Sensex, t-test.