Effects of Macroeconomic Factors on Indian Stock Market Performance: An Empirical Analysis

Abstract

This paper examines the macroeconomic factors that influence the performance of the Indian stock market index, NIFTY 50. The study is distinctive in that it employs both primary and secondary data to draw conclusions. Initially, nine years of monthly data on macroeconomic variables are analyzed using logistic regression against the monthly performance of the NIFTY 50 index. In the second stage, the results of the regression analysis are corroborated with primary data collected through face-to-face interviews with stock market experts. The secondary data analysis indicates that the Dow Jones Index and exchange rate movements are the primary determinants of the NIFTY 50 index. However, experts suggest that other factors, such as political stability, economic conditions in developed countries, and India's bilateral relations with other nations, are also crucial in forecasting the movement of the NIFTY 50 index. This study is the first in the Indian context to combine domestic and international factors to forecast the NIFTY 50 index movement.