In this paper an effort was made to evaluate the level of efficiency of the firms that belong to the selected manufacturing sub-sectors in India for the period 1999-2000 to 2013-2014 using Stochastic Frontier Analysis. Subsequently, the microeconomic and macroeconomic determinants of efficiency were analysed applying Panel Censored Tobit Regression Model. The study revealed that Electrical Equipment sub-sector was found to be the most efficient sector followed by the sub-sectors Auto Parts and Equipment, Pharmaceutical and Biotechnology, Chemicals, Textile, Food products and Steel respectively. The study also showed that leverage, size of the firm, age of the firm, openness of the firm (microeconomic) and inflation (macroeconomic) made notable contribution towards changing the level of efficiency of manufacturing firms during the study period. However, their contributions were not the same in all sub-sectors under study.
Determination of significant sector specific macroeconomic factors under the board manufacturing industry is an important task. In Indian context, using the monthly data on five major manufacturing sector specific indices (such as BSE-Basic Materials, BSE-Consumer Discretionary Goods and Services, BSE-Fast Moving Consumer Goods, BSE-Health Care and BSE-Industrials) and the macroeconomic variables (gold price, index of industrial production, wholesale price index, money supply, foreign portfolio investment ratio (FPIR), rate of interest, real effective exchange rate and crude oil price and economic policy uncertainty) for the period September, 2005 to November, 2016, the present study attempted to explore the significant sector specific macroeconomic variables in long run as well as short run. The empirical results obtained by applying the ARDL-UECM model suggested that economic policy uncertainty, FPIR and price factor were observed to be the most important determinants of all the five sectoral stock indices for the study period.
Purpose of the study: The present study investigates the influence of selected macroeconomic variables in terms of international crude oil price, exchange rates, domestic gold price, real interest rates and wholesale price index on stock market indices (sensex and nifty) of India. Background: Macroeconomic variables directly or indirectly affect the stock prices because it influences strongly the stock returns by affecting the stock prices, which supports the existance of a long-run relationship between the macroeconomic variables and stock prices. Methodology: This study is based on time series monthly data collected from Reserve Bank of India database; BSE and NSE database, investing.com and yahoo, finance database for the period July 1997 to July 2015 with the application of financial econometrics. Results: The empirical results reveal that sensex and nifty reactions to shocks on crude oil prices, exchanges rates, real interest rates and whole prices indices were positive while a negative shock from sensex and nifty to real interest was noticed.
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