ANALYSING THE IMPACT OF KEY MACRO VARIABLES ON S & P BSE SENSEX

Abstract

Purpose – Numerous literature surveys explore the external factors influencing share prices across different markets. These studies analyze how various external variables impact company share prices, providing insights into market fluctuations. Researchers have often concentrated on specific factors affecting share prices. This study is significant as it investigates the impact of key macro economic variables and major Indian stock market index.

Design/methodology/approach – For analysis, three macro economic variables such as crude oil, gold price and exchange rate and S & P BSE Sensex were selected covering the study period from 01 January 2008 to 31 December 2023. The data collected for this study are month data of the variables. The tools used in this study are: (1) descriptive statistics, (2) normality test and (3) Granger Causality Test 

Findings – The empirical findings of the study reveal that Gold Prices can be used to estimate the S&P BSE SENSEX index. Additionally, a bidirectional causal relationship was identified between the Exchange Rate and the S&P BSE SENSEX index, indicating mutual influence between these two variables.

Research limitations/implications – This study's findings present numerous opportunities for future research. A notable implication is the necessity for future scholars to investigate and clarify the inconsistencies observed in statistical results reported by different finance researchers.

Originality/Value – This study makes a modest effort to demonstrate the existence of a relationship between macroeconomic variables and the S&P BSE Sensex. However, understanding the country's current economic situation is crucial.