The Macro Lens: Exploring the Impact of Macroeconomic Variables on Indias Small Cap, Mid Cap, and Large Cap Indices
subject: Consumer Price Index; Domestic Institutional Investment; Foreign Institutional Investment; Gold Price; Gross Domestic Product; MIFTY Largecap 50; NIFTY Midcap 50; NIFTY Smallcap 50; Purchasing Managers Index; Reverse Repo Rate
description: Subject and Purpose of Work: This study explores the intricate relationship between key macroeconomic variables and Indias equity market segments, specifically the NIFTY Small-cap, Mid-cap, and Large-cap indices. The primary objective is to evaluate how selected macroeconomic factors influence market dynamics and investor sentiment in the Indian context. Materials and Methods: The research analyses monthly data spanning five years, from January 2019 to January 2024. The macroeconomic indicators considered include Foreign Institutional Investment (FII), Domestic Institutional Investment (DII), Consumer Price Index (CPI), Purchasing Managers Index (PMI), Treasury Bill Rate, Gold Price, and Reverse Repo Rate. Statistical techniques such as the Unit Root Test, Ordinary Least Squares (OLS), and Granger Causality Test are employed to assess the short-term and long-term impacts of these variables on market indices. Results: The findings reveal that GDP, CPI, PMI, and Gold Price exhibit no statistically significant influence on the NIFTY Small-cap, Mid-cap, or Large-cap indices, aligning with certain earlier studies. However, variables like FII, DII, Treasury Bill Rate, and Reverse Repo Rate show varying degrees of influence across the indices, highlighting the complex and segmented nature of the Indian equity market. Conclusion: These insights are valuable for investors, policymakers, and financial analysts in refining investment strategies, informing policy frameworks, and enhancing market forecasting models. The study underscores the need for continuous evaluation of macroeconomic influences to better navigate market volatility and investor behaviour. 2025 Sathish Pachiyappan et al., published by John Paul II University of Applied Sciences.
creator: Pachiyappan, Sathish; Sardana, Dhruv; Joshi, Unnati; Rajesh, Gautam; Pallickal, Abel Thomas; Chellasamy, Aarthy; Nagarathinam, Aishwarya; Joshuva, Selvakumar J.
source: Economic and Regional Studies / Studia Ekonomiczne i Regionalne;Volume;18;Issue;3;pp.376-388
publisher: Sciendo
date: 01-01-2025
rights: All Open Access; Gold Open Access; Green Open Access
relation: ISSN: 20833725;
format: online
language: English
type: Article
coverage: Pachiyappan S., School of Business and Management, Christ University, India; Sardana D., School of Business and Management, Christ University, India; Joshi U., School of Business and Management, Christ University, India; Rajesh G., School of Business and Management, Christ University, India; Pallickal A.T., School of Business and Management, Christ University, India; Chellasamy A., School of Business and Management, Christ University, India; Nagarathinam A., School of Business and Management, Christ University, India; Joshuva S.J., School of Business and Management, Christ University, India