Impact of Selected Macroeconomic Variables on Stock Market in India

Abstract

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.

How macroeconomic indicators influence gold price management

“…However, there is no relative importance between the price of gold and oil. In addition, macroeconomic factors implementing the relevant policies and results show there has been an adverse impact on the Malaysian Stock Exchange as well as in further research (Bhunia and Ganguly, 2015;Singh, 2014a).…”

“…This research utilized the FAVAR model to measure all macroeconomic factors that influence gold prices and trends (Long and Hanh, 2019). Bhunia and Ganguly (2015) examined the effects of IR, commodity prices and the conversation rate on stock market performance in Malaysia and showed the relationship among variables included exchange rates and bonds. The results concluded that the IR and exchange rate indicate positive and significant relationships between them.…”