The Impact of Macroeconomic Factors on the Indian Stock Market : An Assessment

Authors

  •   Dinkar Nayak RBI Chair Professor, RBI Endowment Unit, Faculty of Commerce, The Maharaja Sayajirao University of Baroda, Sayaji Gunj, Baroda - 390 002, Gujarat
  •   Rubina Barodawala Research Scholar, Department of Economics, Faculty of Arts, The Maharaja Sayajirao University of Baroda, Sayaji Gunj, Baroda - 390 002, Gujarat

DOI:

https://doi.org/10.17010/aijer/2021/v10i2-3/167172

Keywords:

Macroeconomic Variables

, Stock Market Returns, ARDL, Cointegration.

JEL Classification Codes

, E44, G10.

Paper Submission Date

, July 9, 2021, Paper Sent Back for Revision, July 17, Paper Acceptance Date, August 10, 2021.

Abstract

The present study attempted to analyze the relationship between selected macroeconomic variables: interest rate, inflation rate, foreign institutional investments, foreign exchange reserves, gold prices, money supply, and India’s stock market index, that is, the Bombay Stock Exchange from April 2012 – June 2020. Various studies in the well-documented literature have examined the association between macroeconomic variables and the stock market in diverse ways and forms. This paper encapsulated the long-run and short-run dynamics of the relation between the variables, as mentioned above, with the ARDL model’s help. The empirical analysis displayed a strong liaison between India’s stock market and money supply, foreign institutional investment, foreign exchange reserves, wholesale-price index, and call money rate (interest rate). Further, it also showed a negative and significant long-term adjustment coefficient.

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Author Biographies

Dinkar Nayak, RBI Chair Professor, RBI Endowment Unit, Faculty of Commerce, The Maharaja Sayajirao University of Baroda, Sayaji Gunj, Baroda - 390 002, Gujarat

ORCID iD : https://orcid.org/0000-0002-2088-2501

Rubina Barodawala, Research Scholar, Department of Economics, Faculty of Arts, The Maharaja Sayajirao University of Baroda, Sayaji Gunj, Baroda - 390 002, Gujarat

ORCID iD : https://orcid.org/0000-0003-4124-4055

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Published

2021-09-30

How to Cite

Nayak, D., & Barodawala, R. (2021). The Impact of Macroeconomic Factors on the Indian Stock Market : An Assessment. Arthshastra Indian Journal of Economics & Research, 10(2-3), 27–40. https://doi.org/10.17010/aijer/2021/v10i2-3/167172

Issue

Volume 10, Issue 2-3, April-September 2021

Section

Articles
Crossref
Scopus
Google Scholar
Europe PMC

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