A Study on Impacts of Macro-Economic Variables on Indian Stock Market

- Vidhi Kanabar, Student, Faculty of Management, GLS University, Ahmedabad

- Dr Darshana Khakhar , Assistant Professor, Faculty of Management, GLS University.

Abstract:

Stock Market plays very essential role in Indian economy, as it helps in diversifying the investments. In order to perform this essential role, it must have a significant relationship with economy. Thus, the purpose of this study is to examine the long-run and short-run relationship between BSE Sensex from Indian Stock Market and five selected Macroeconomic variables. The explained variables in the study includes average monthly of BSE and while the explanatory variables are Forex rates, WPI, CPI, IIP, GDP. The data used in the study is in the monthly frequency and period of the study includes from January 2013 to December 2019. By applying Co-relation and Regression it was found that there exists negative relationship between Forex rates and BSE, as well as Forex rates with other variables. Whereas GDP is highly correlated with BSE and thus it would help in models forecasting models for Sensex. Regression test also results in presence of negative slope between Forex rates and BSE Sensex. By applying various tests, it was proved that there exists a long-run relationship between BSE Sensex and Macroeconomic variables.

Keywords

Indian Stock Market, Macro-Economic Variable, GDP

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