Association between Select Financial Variables and the Indian Stock Market

Abstract

The study was carried out to examine the association between select financial variables and the stock market in India using the time-series data from July 2011 to June 2023. Correlation analysis demonstrated that BSE-Sensex was positively associated with CPI, exchange rate, and gold price but negatively associated with crude oil price. Economic regression analysis illustrated that BSE-Sensex was significantly influenced by its past value but had no relationship between select financial variables. The governments may intervene in currency markets to manage exchange rate fluctuations; impose price controls to prevent excessive price increases, encourage domestic oil production through exploration and technological advancements that can reduce reliance on imports, and implement regulations on gold imports, exports, and trading can help manage price fluctuations and subsequently impact stock market performance.