A study on the Relationship between gross domestic product and Stock Market Performance in India - Research Notes

Abstract

Macroeconomics deals with aggregate economic activities such as production, supply, national income, employment, inflation, interest rates in markets, exchange rates and other factors. The change in macro-economic variables strongly affects the variables of micro economy which deals with small units and individual firms. On the other hand, financial system refers to a systematic arrangement of flow of funds from surplus to deficit units comprises of financial instruments, institutions, services and financial markets. In developed economies development of financial markets is very significant which later on extended to the emerging countries like India. The stock market or securities exchanges are secondary markets where already issued shares bought and sold and provide high liquid to investors. In India, two types of stock exchanges are working now namely Bombay stock exchange since 1875 and new stock exchange National stock exchange since 1992. The two stock exchanges have two individual indices namely SENSEX and NIFTY which are considered as barometers of economic development of the country. The academic and industrial research studies proved significant relationship among macro-economic variables and stock market indices. The study is undertaken to understand the trend and predication of share prices behaviour and their impact on the future add value to the investor funds.