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

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

- Yasmeen Pathan, 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:

Macro –Economic Variables, Indian Stock Market

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