Title: The Impact of Interest Rate Variability on Banking Stock Performance: Insights into Risk and Responsibility in Modern Finance
Authors: Ritu Chaudhary, Dr. Manali Agrawal
Volume: 9
Issue: 6
Pages: 27-33
Publication Date: 2025/06/28
Abstract:
This research paper delves into the effect of interest rate fluctuations on the performance of banking sector stocks over a comprehensive period of nine years, from 2014 to 2023. Employing quantitative techniques such as regression and correlation analysis, the study aims to determine the strength and nature of the relationship between the Reserve Bank of India's (RBI) repo rate and the Bank Nifty index levels. While conventional financial theory suggests a strong inverse correlation between interest rates and stock market performance, particularly in interest-sensitive sectors like banking, our empirical analysis reveals only a weak correlation. This finding challenges prevailing assumptions and highlights the necessity of incorporating broader macroeconomic indicators in investment and policy decisions. The paper outlines implications for various stakeholders, including investors, market analysts, and policymakers.