Abstract
The stock market returns not only depends on the firms’ fundamentals but also depends upon the macroeconomic factors of the economy. The current study focuses on the macro perspective of stock market behavior. It was carried out to analyse the association between Indian stock market and macroeconomic factors such as Exchange Rate, Crude Oil Prices, Index of Industrial Production (IIP), Foreign Institutional Investment (FII) Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), Interest Rate & Inflation, and also to know the effect of these macroeconomic factors on the Indian stock market. The study concludes that correlation between Exchange rate, Crude oil price, FII, SLR, CRR, Interest rate and NIFTY is significant. When it comes to Sensex it was found that correlation is significant with respect to all the macroeconomic variables considered except IIP. Based on the results of Granger Causality test it has been concluded that CRR and FII causes Nifty and CRR causes Sensex. Both Sensex and Nifty in turn, granger cause Interest Rate.
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