Impact of Inflation Stock Market Returns

Abstract

This research paper examines the impact of inflation on stock market returns, focusing on the Indian stock market. Utilizing a comprehensive methodological approach, we analyse the relationship between inflation and stock market performance through various quantitative techniques including trend analysis, regression analysis, histograms, growth percentage models, and descriptive statistics. The trend analysis reveals patterns and shifts in stock market returns in response to changing inflation rates. Regression analysis is employed to quantify the strength and nature of the relationship between inflation and stock market returns, providing insights into the degree to which inflationary pressures affect market performance. The findings of this study indicate a multifaceted relationship between inflation and stock market returns. While high inflation periods generally correlate with increased market volatility and lower returns, the impact varies across different sectors and economic conditions. Our analysis also includes the significance of monetary and fiscal policies in moderating the effects of inflation on the stock market. This research contributes valuable insights for investors, policymakers, and financial analysts, by having a detailed analysis of Inflation-Stock market study. The study's results can inform investment strategies and policy decisions aimed at mitigating the adverse effects of inflation on stock market performance and enhancing market resilience. The purpose of the study is to investigate he correlation, understand the investor behaviour and recommend the insights from the study.