A Study on the Relation Between the Indian Stock Market and Indian Economy
B. Ashok1, Abin P Sajan2, Andrew Chacko3
1Prof B Ashok, Xavier Institute of Management and Entrepreneurship, Bangalore (Karnataka), India.
2Abin P Sajan, Student, Xavier Institute of Management and Entrepreneurship, Bangalore (Karnataka), India.
3Andrew Chacko, Xavier Institute of Management and Entrepreneurship, Bangalore (Karnataka), India.
Manuscript received on 10 October 2022 | Revised Manuscript received on 12 November 2022 | Manuscript Accepted on 15 November 2022 | Manuscript published on 30 November 2022 | PP: 71-76 | Volume-2 Issue-2, November 2022 | Retrieval: 100.1/ijef.A2538053123 | DOI: 10.54105/ijef.A2538.02021122
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© The Authors. Published by Lattice Science Publication (LSP). This is an open-access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: The relationship between stock market growth and economic activity has long been an topical discussion amongst economist, market players and policy makers. A natural question that arises is wether macro Economics influences stock behaviour or if stock market has its own dynamics, Its logical to believe that healthy macro economic indicators will improve both demand and industry output and as well its profits and growth which in turn would drive up the stock prices and vice verse. In the context of India, this study makes an effort to determine the correlation between stock market development and economic growth. The analysis reveals a clearly defined long-run relationship between the stock market indicators and economic growth in India using cointegration and causality tests for the period of April 2010 to March 2020. The empirical findings demonstrate a two-way causal relationship between market indices and economic growth with respect to Macro-Economic indicators.
Keywords: GDP<Macro Economic Indicator, Lead and Lag, M3 (Broad money),
Scope of the Article: Economics