Abstract: The decision of the management regarding the payment of dividend depends on the prevailing condition of the firm and also the preference of the investors. A number of researchers have advanced theories and provided empirical evidence regarding dividend policy issue, however, is yet unresolved and challenging. For this purpose, twenty nationalized banks in India are studied. Financial data for the same was retrieved for 5 years from the Stock exchange website, Financial Ratios and from Fact sheets of banks. The primary aim of this research is to develop an elaborate discussion on how the volatility is prevailed in the Indian stock market with the dividend policies of different banks. Statistical tool like Moving Average is used for comparing the market value of shares before the date of Dividend declaration and after the announcement of dividend declaration. This study has been undertaken with the intention of evaluating the effect of various Dividend Policy on market price of commercial banks listed in Bombay Stock Exchange. The results of the data analysis reveal that there is a significant effect of dividend policy on the market value of share price of selected Indian Banks. When Banks are display consistent dividend histories and pay more dividends to the shareholders they become more attractive to investors