Macroeconomic Impression and Performance of stock market in India

Abstract

The main objective of this study is to reveal how stock market is affected by the macroeconomic forces. In the era of continues development and growth of stock market as well as dynamic economic prospects, it is imperative to consider this theme. Numerous macroeconomic aspects are influencing and delectating the stock market in developing countries like India. The investors are getting signal from several forces while taking investment decisions regarding higher or lower return and one aspect among them is macroeconomic panorama. Consequently, macroeconomic concern be susceptible to disturb stock market progresses. In this paper an attempt is made to derive the impact of five macroeconomic variables namely; ER (Exchange Rate), IR (Interest Rate), IF (Inflation Rate), GP (Gold Price), COP (Crude Oil Price) on performance of stock market in India. In this study 10 years yearly data from 2010 to 2019 has been used. This study includes both descriptive as well as inferential statistics like Correlation and OLS regression to find out the association and significant impact of macroeconomic variables on stock market in India. It is found that only the Exchange rate among the variables put significant impact on stock market as well as highly correlated with stock market whereas Interest rate is positively, Inflation rate and Crude Oil are negatively Correlated but all three are putting insignificant impact. In case of Gold price, the correlation result is positive but regression result is statistically insignificant during the period of study. As the interest rate and inflation rate are negatively affecting the stock market government should strategically formulate fiscal and monetary policy for betterment of the investors.