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