Impact of key macroeconomic variables of India and USA on movement of the Indian stock return in case of S&P CNX nifty

Abstract

The stock market is referred as the barometer of Indian economy; it is the indicator of the country's economic condition. Many studies have established the relationship between Indian stock returns and macro economic variables such as gold price, oil price, exchange rate, etc. This study investigates the relationship between the Indian stock returns and the Macro economic variables viz interest rate of India, interest rate of USA, inflation rate of India, inflation rate of USA, GDP growth rate of India and GDP growth rate of USA. Quarterly data was collected for a period from January, 2000 to December, 2015 for all the macro economic variables. Regression Model was used to analyze the data, the variables were tested for stationarity, serial correlation, heteroscedasticity and normality. The study found that the GDP growth rate of India and USA are the significant predictors of S&P CNX Nifty return.