Impact of Macroeconomic Factors on Selected Sectors of BSE

Abstract

The year 1991 will forever remain a landmark year in the history of stock markets in India. The stock markets have become a yardstick for measuring the performance of an economy and the macro economic variables have become important indicators of the health of the economy. Here, an attempt has been made to study the relationship between selected external macroeconomic variables and different sectoral indices at Bombay Stock Exchange (BSE). For the purpose of study seven macroeconomic variables such as Index of Industrial Production, Consumer price Index, Call Money Rate, Dollar Price, Foreign Institutional Investment, Crude Oil Prices and Gold Price are used to study the impact of macroeconomic variables on Sectoral Indices at Bombay Stock Exchange (BSE) viz. Auto, Bankex, FMCG, Consumer Durable and Metal. The monthly statistical data for above mentioned variables have been used for five years covering the period from April 2014 to March 2019. It was observed that all variables show high correlation amongst themselves and Call Money Rate is the only variable that affects all the Indices.