Dividend announcements are significant corporate events that often influence investor behavior and stock price movements. This study examines the impact of dividend announcements on share price volatility in the Indian cement sector, with a particular focus on India Cement Company listed on the National Stock Exchange (NSE). Using secondary data collected from NSE and company reports for the period 2018–2023, the study employs event study methodology to analyze the abnormal returns and volatility around dividend declaration dates. The findings indicate that dividend announcements have a noticeable effect on stock price volatility, with significant short-term market reactions observed among investors. Positive dividends tend to stabilize investor sentiment, while unexpected changes in dividend policy lead to higher volatility. The study provides empirical evidence on the relationship between dividend policy and market response, offering insights for investors, policymakers, and corporate managers regarding strategic dividend decisions and their impact on stock performance.