ItemArticle

Exploring The Dynamic Relationship between Macroeconomic Variables on Indias Premier Benchmark Sensex 30 Index

Title
Exploring The Dynamic Relationship between Macroeconomic Variables on Indias Premier Benchmark Sensex 30 Index
Creator
Vishweswarsastry, V.N.; Guruprasad Desai, D.R.; Manjushree; Narasimha Murthy, H.; Kantharaju, N.P.
Description
The purpose of the study is to examine the impact of macroeconomic indicators on the closing prices of the BSE Sensex 30, a key benchmark index in India known for its volatility in response to economic conditions. This research is particularly relevant in the context of economic shocks, as it aims to recommend the adoption of appropriate economic policies that could benefit the stock market index, ultimately advancing growth in the capital market. Using the ordinary least squares (OLS) method, the study analyzes the effect of various macroeconomic variables on the BSE Sensex. Additionally, the complex relationship between these variables is explored using the Johansen Cointegration test and evidenced through the Vector Error Correction (VECM) model. The findings reveal that GDP, the Index of Industrial Production (IIP), Indias foreign trade, gold prices, Foreign Direct Investment (FDI), and money supply significantly influence the BSE Sensex. However, External Commercial Borrowing, the Consumer Price Index (CPI), exchange rates, and foreign exchange, which showed the highest Variance Inflation Factors (VIF), were excluded from the study based on OLS results. In conclusion, the study advocates for the implementation of suitable economic policies that support the stock market, thereby aligning with investors interests and promoting capital market growth. Vishweswarsastry V. N. et al.
Source
International Journal of Accounting and Economics Studies;Volume;12;Issue;4;pp.598-606
Date
01-01-2025
Publisher
Science Publishing Corporation Inc.
Subject
Cointegration; Econometrics; Multicollinearity; OLS; VECM
Coverage
Vishweswarsastry V.N., Department of Commerce, Manipal Academy of Higher Education, Manipal, India; Guruprasad Desai D.R., Department of Commerce, Manipal Academy of Higher Education, Manipal, India; Manjushree, Presidency University, Karnataka, Bangalore, India; Narasimha Murthy H., Department of Professional Studies, School of Commerce, Finance and Accountancy, CHRIST University, Bangalore, India; Kantharaju N.P.
Rights
All Open Access; Bronze Open Access; Green Open Access
Relation
ISSN: 23094508;
Format
online
Language
English
Type
Article

Citation

Vishweswarsastry, V.N.; Guruprasad Desai, D.R.; Manjushree; Narasimha Murthy, H.; Kantharaju, N.P., “Exploring The Dynamic Relationship between Macroeconomic Variables on Indias Premier Benchmark Sensex 30 Index,” CHRIST (Deemed To Be University) Institutional Repository, accessed June 17, 2026, https://archives.christuniversity.in/items/show/23242.

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