This study examined the stock market reaction to interim dividend announcements by Indian public sector banks in the year 2014. The year 2014 was the Indian parliamentary election year; there were a lot of expectations about dividends by the investing community. Not disappointing the investors, 22 of the 28 public sector banks declared interim dividends. This study analyzed the semi-strong efficiency of the Indian stock market with respect to interim dividend announcements by the banking companies in the year 2014. The methodology used for the study was market model event study. The results indicated that there were significant positive abnormal returns in some banking stocks prior to such announcements, signifying the investors were expecting such news and ,therefore, there was upward movement of stock prices. On the actual day of interim dividend announcement, 10 banks reacted positively on the announcement day, and 12 banks reacted negatively to the news.

1. Aamir, M., & Shah, S. Z. A. (2011). Dividend announcements and the abnormal stock returns for the event firm and its rivals. Journal of Business and Management Research, 1(8), 72-76.
2. Acker, D. (1999). Stock return volatility and dividend announcements. Review of Quantitative Finance and Accounting, 12(3), 221 - 243.
3. Aharony, J., Falk, H., & Swary, I. (1988). Information content of dividend increases: The case of regulated utilities. Journal of Business, Finance and Accounting, 15 (3), 401 - 414.
4. Balachandran, B. (2003). UK interim and final dividend reductions: A note on price reaction. European Journal of Finance, 9 (4), 379 ‐ 390.
5. Bhatia, P. L. (2010). A study of dividend announcements on stock returns of popularly traded companies in India. APJRBM, 1 (3), 178 - 189.
6. Bozos, K., Nikolopoulos, K., & Ramgandhi, G. (2011). Dividend signaling under economic adversity: Evidence from London Stock Exchange. International Review of Financial Analysis, 20(5), 364 - 374.
7. Capstaff, J., Klaeboe, A., & Marshall, A. (2004). Share price reaction to dividend announcements: Empirical evidence on the signalling model from the Oslo Stock Exchange. Multinational Finance Journal, 8 (1 - 2 ), 115 - 139.
8. Ebrahimi, M., & Chadegani, A. A. (2011). The relationship between earning, dividend, stock price and stock return: Evidence from Iranian companies. International Conference on Humanities, Society and Culture (IPEDR), Vol. 20, 318 - 323.
9. Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25 (2), 383 - 417.
10. Fama, E. F. (1991). Efficient capital markets II. The Journal of Finance, 46 (5), 1575 - 1617.
11. Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The adjustment of stock prices to new information. International Economic Review, 10 (1), 1-21.
12. Ghosh, C., & Woolridge, J. R. (1988). An analysis of shareholder reaction to dividend cuts and omissions. Journal of Financial Research, 11 (4), 281 - 294.
13. Hashemijoo, M., Mandavi - Ardekani, A., & Younesi, N. (2012). The impact of dividend policy on share price volatility in the Malaysian Stock Market. Journal of Business Studies Quarterly , 4 (1), 111 - 129.
14. Kalay, A., & Loewenstein, U. (1985). Predictable events and excess returns : The case of dividend announcements. Journal of Financial Economics, 14, 423 - 449.
15. Mahadevan, A., & Saravanakumar, S. (2011). Dividend announcement impact on Indian bourses. International Journal of Enterprise and Innovation Management Studies, 1(3), 1-11.
16. Mamun, A., & Hoque, N., & Mamun, A. M. A. (2013). Stock price reaction to dividend announcement : The case of Bangladesh capital market. Journal of Economics and Sustainable Development , 4 (8), 89 - 95.
17. Mishra, A. K. (2007). The market reaction to stock splits - Evidence from India. International Journal of Theoretical and Applied Finance, 10 (2), 251 - 271.
18. Ray, K. K. (2011). Market reaction to bonus issues and stock splits in India: An empirical study. IUP Journal of Applied Finance, 17 (1), 54 - 69.
19. Ryaly, V.R., Kumar, R.S.R.K., & Urlankula, B. (2008). A study on weak form of market efficiency in selected Asian stock markets. Indian Journal of Finance, 8 (11), 34 - 43.
20. Selvam, M., Babu, M., Indumathi, G., & Kogila, N. (2010). Impact of dividend announcement on share price: An evaluation study. Indian Journal of Finance, 4 (4), 3 - 16. DOI: 10.17010/ijf/2010/v4i4/72619
21. Vigg, S., Nathani, N., Kaur, S., & Holani, U. (2008). Efficient market hypothesis: A case study of Bombay Stock Exchange. Indian Journal of Finance, 2 (7), 3 -11.