At the stroke of 8 pm, on 8th November 2016, PM Narendra Modi made a historical move by announcing the scrapping out of two highest denomination currency notes in India i.e. Rs. 500 and Rs. 1000 as legal tender by central government. This financial surgical by the PM, also called demonetization, became one of the most sensational and bold move by any government to curb the menace of black money, counterfeit notes, parallel economy and terror funding. This will also have a major impact on the common man in terms of leading towards a cashless economy, which will enhance transparency and accountability in the economy. It would be too early and inappropriate to comment on the exact impact this move will have on our economy in a long run, but then we can try finding out the impact on various sectors. The paper analyses the impact of demonetization on Indian stock market as represented by Sensex index of Bombay Stock Exchange. Also, the paper further analyses the impact of the decision on various sectors of Indian Economy represented by various sectorial indices of service and manufacturing industry of Bombay Stock Exchange through paired t test considering a time frame of a month pre and post demonetization decision.

Keywords: Demonetization, Indian Stock Market, Black Money, BSE, Sensex.