Impact of macroeconomic indicators on Indian stock market

Abstract

The main purpose of this paper is to analyse the relationship between independent variables-macroeconomic indicators- exchange rate, wholesale price index, Index of Industrial Production, Foreign Portfolio Investments, Crude Oil Prices, and dependent variables- Stock Market Indices- Nifty 50 and Sensex. Unit root test, co-integration test and error correction model are being used to describe how all the variables behave in the short run as well as in long-run. The findings indicated that from the selected independent macroeconomic variables only crude oil has a significant impact on only one stock index i.e., NSE Nifty 50. The rest independent variables which are exchange rate, Foreign Portfolio investment, Index of Industrial Production, Wholesale Price Index impacted neither NSE Nifty 50 nor BSE Sensex.