Analyzing the Interplay between Economic Growth Rate, GDP per Capita, and Stock Market Performance in India: A Case Study of the BSE Index

Abstract

The paper discusses the connection between GDP per capita and economic growth from 1980 to 2022, which has had a positive influence on growth of Indian stock markets. The study is based on the real GDP growth rate, which has to be considered as an economy's growth. The effects of the study show that, in relation to stock price performance, a causal link has been established between GDP growth rates and GDP Per capita. The purpose of this study is to explore the historical link between economic growth rates and GDP Per Capita on stock market performance in India, as well as changes influencing investor sentiment and future behaviour on the Stock markets. The persistence of this research is to analyse the long term connection involving Bombay Stock Exchange and macroeconomic variables. It analysis a multiple regression equation model to explore the interactions among these factors. The regression model shows that the independent factors account for a significant influence, explaining 83.4% of the variation in the dependent variable, which is the BSE index. The result shows that there is the strong positive correlation between GDP Per Capita and BSE index. Similarly, there is the weak positive correlation between Economic Growth Rate(EGR) and BSE index. The research's conclusions inform investment plans and assist interested parties in formulating policies.