Stock market efficiency has been considerable importance in financial literature. The efficiency with which the capital formation is carried out depends on the efficiency of the capital markets and financial institutions. A capital market is said to be efficient with respect to corporate event announcement (stock split, buyback, right issue, bonus announcement, merger & acquisition, dividend etc) contained information’s and its disseminations. How quickly and correctly the security prices reflect these event contained information’s show the efficiency of stock markets. This study examines the stock price reaction to announcement of rights offer of equity in India made during the period 2001 to 2012. We find that announcement of rights issues of equity are met with insignificant negative reaction (Value neutral) which is similar to a number of developing countries. As propounded by earlier scholars, rights issue should not have any effect on the price of the share in an informationally efficient market.
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