Impact of Macroeconomic Variables on National Stock Exchange

Abstract

Stock market is the major economic reflector of a country. The research aim primarily considers the macroeconomic variables of Indian economy and its impact on National Stock Exchange. In this research, selected macroeconomic variables are inflation, Foreign Portfolio Investment in Equity (FPIE), Foreign Portfolio Investment in Debt (FPID), Foreign Exchange Rate (FOREX). These macroeconomic factors have been used as independent variables. The specific objective of this paper is to analyse the relationship and impact of mentioned variables on National Stock Exchange (NSE). The current paper makes an attempt to study the relationship and impact of FPIE, FPID, FOREX, inflation on Indian stock market using statistical measures like correlation coefficient and Multiple Regression Model. There exists positive correlation between inflation, FOREX, FPIE with NSE. There is negative relationship between FPID and NSE. The regression analysis depicts that the effect between inflation, FPIE with NSE is positive. The effect of FPID and FOREX on NSE is negative.