Abstract:
The study examines the effects of selected macroeconomic variables on the stock market performance in India. Monthly data collected for last 20 years (1st January 2001 to 31st December 2020) of respective variables and indices as Interest rate, exchange rate, inflation and BSE (Sensex). Analysis part was achieved using the VAR model approach by computing the impulse response functions and Variance Decomposition Analysis. Overall study revealed that the exchange rate, inflation and interest rate is affecting the BSE indices as per the multiple regression models co integration model there was no strong integration noticed between variable and the BSE. As per the impulse response function result shows that BSE responds negatively to the shocks of exchange rate and positively to its own shocks of Inflation and interest rate shown by the side in which blue line lies with reference to the origin black line.
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