IMPACT OF MACROECONOMIC FACTORS ON NIFTY 50
Stock Markets reflect the sentiment of the investors towards the economy as whole. Whenever there are any policies or changes impacting the economy, the investors tend to modify their investing strategies which can be reflected in the stock market output. In this paper, we will be looking at the impact of 6 selected macroeconomic factors inflation in terms of CPI, economic growth in terms of IIP, Repo Rate, Exchange Rate in terms of USD/INR, Gold Price per 10 grams and 10 Year Bond Yield on the index, NIFTY 50. These factors broadly cover the macroeconomic factors and these factors are key variables which cause changes to the behaviour of investors. Univariate and Multivariate tests and models are used to determine the impact of macroeconomic factors on NIFTY 50. Multivariate model needs to be considered because the variables are time series. Test like unit root test, VAR model, co-integration test and causality test used for analysis. For Univariate, correlation and linear regression model are used. This study help us to understand how changes in the macroeconomic environment affects the investors’ sentiments which in turn affects the stock market output. The conclusion will also help us predict on how a new investor can go long or short in the stock market when the macroeconomic results are expected or announced.
---