SUMMER TRAINING REPORT

ON

“EQUITY RESEARCH INTERNSHIP AT COLLABGENICS”

SUBMITTED BY
SHUBHAM CHAUDHARY
06116659422

SUBMITTED IN PARTIAL FULFILLMENT OF

THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

(FINANCIAL ANALYSIS)

UNDER THE SUPERVISION OF

MS. REEMA MONGA

UNIVERSITY SCHOOL OF MANAGEMENT STUDIES

GURU GOBIND SINGH INDRAPRASTHA UNIVERSITY
SECTOR-16-C, DWARKA, NEW DELHI-110078

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 MBA Major/Minor Projects
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2
 CERTIFICATE OF AUTHENTICITY
TO WHOM SO EVER IT MAY CONCERN

This is to certify that the project work “IMPACT OF MACROECONOMIC

VARIABLES ON THE INDIAN STOCK MARKET” made by Shubham
Chaudhary, MBA FA, 1st year, 06116659422 is an authentic work carried out by
her under guidance and supervision of Ms. Reema Monga.

The project report submitted has been found satisfactory for the partial
fulfilment of the degree of Master of Business Administration.

SIGNATURE:

3
 DECLARATION

I, Shubham Chaudhary (06116659422) a student of University School of

Management Studies, Batch (2022-2024) declares that every part of the
Project Report “IMPACT OF MACROECONOMIC VARIABLES ON THE
INDIAN STOCK MARKET” submitted by me is original and solely done
by me.

I was in regular contact with our faculty guide and contacted infinite
number of times for discussing the project. I hereby certify that all the
endeavor put in the fulfilment of the task are genuine and original to the
best of my knowledge and I have not submitted it earlier elsewhere.

SHUBHAM CHAUDHARY
06116659422
MBA FA
1ST YEAR

Date of project submission: 30th June, 2023

4
 ACKNOWLEDGEMENT

Guidance, inspiration and motivation have always played a key role in

the success of any venture. I would like to pay my sincere regards to all
those who guided me in my project work. I would like to avail this
opportunity to pay my sincere gratitude and regards to Dean and
Professor A.K Saini, HOD, University School of Management Studies
for providing me such a wonderful opportunity to widen the horizons of
my knowledge. I would also like to express my heartfelt thanks to my
Project Guide Ms. Reema Monga, for giving his support, guidance and
encouragement throughout the project work.

Last but not the least I would like to thank my parents, family and
friends who have directly or indirectly contributed in making this project
a success.

Student Name – Shubham Chaudhary

Enrolment No. – 06116659422
Programme – MBA FA (1ST YEAR)
Batch – 2022-2024

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 TABLE OF CONTENT
Content Page No.
Executive Summary 7

Chapter 1: Introduction 8-14

Introduction 9-11
Stock Market 11-12
Bombay Stock Exchange 12
National Stock Exchange 12
Sensex and Nifty 13-14
Chapter 2: Literature Review 15-20

Chapter 3: Research Methodology 20-22

Problem Statement
Variables selected
Objective
Research Design
Data collection
Data period
Tool used for data analysis
Chapter 4: Data Analysis and Interpretation 23-28

Chapter 5: Findings 29-30

Chapter 6: Conclusion 31-32

Chapter 7: Bibliography 33-34

Chapter 8: Annexure 35-38

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 Executive Summary

This study's major goal is to determine how the NSE Nifty 50 index and the Indian stock market
are related to macroeconomic factors. The study also focuses on the stock market's impact on the
chosen macroeconomics. There are a total of five variables chosen as independent variables:
interest rates, gold prices, foreign exchange reserves, inflation rates, and exchange rates. The
dependent variable is the NSE stock prices. The study's time frame is from January 2016 to
December 2020. (Five years). Regression analysis and correlation matrix analysis are the tools
used for data analysis. The study's findings indicate that interest rates have little bearing on the
values of NSE stocks. The NSE Nifty 50 stock prices are positively impacted by exchange rates
and foreign exchange.

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Chapter 1: Introduction

8
Introduction:

The impact of macroeconomic issues on financial markets has enormous significance in the large
and linked world of finance and continues to capture the interest of researchers, practitioners, and
policymakers. Macroeconomics and financial markets have a complex link that has a significant
impact on how policies are created, how investments are made, and how risk is managed. For
navigating the complexity of the financial landscape and maximising profits, it is crucial to
understand how macroeconomic factors, such as interest rates, inflation, GDP growth, currency
rates, government policies, and global economic conditions, impact financial markets.

This research seeks to present a thorough understanding of the complex effects of

macroeconomic issues on the performance of the financial markets. This study aims to shed
insight on the intricate mechanisms via which macroeconomic factors influence financial
markets and the implications they have for diverse stakeholders by analysing historical data,
performing in-depth case studies, and investigating investor behaviour.

The huge corpus of prior literature that has advanced our knowledge of the connection between
macroeconomics and financial markets serves as the foundation for this study. Numerous aspects
of this link have been investigated using theoretical frameworks, empirical research, and models,
which have helped to shed light on the pathways by which macroeconomic factors influence the
financial markets. However, despite important developments in the field, gaps and chances for
additional research still exist, calling for a thorough analysis.

A strong research technique will be used to address this, incorporating a variety of approaches to
ensure a comprehensive understanding of the subject. Finding and choosing important
macroeconomic elements that have a big impact on the dynamics of the financial markets will be
the first stage. These elements will be picked based on their applicability, influence, and
empirical support for their importance in influencing financial market performance. In order to
evaluate the behaviour and performance of financial markets in reaction to macroeconomic
changes, other financial market indicators, such as stock market indices, bond yields, foreign
exchange rates, and commodity prices, will also be closely evaluated.

9
The data will be analysed quantitatively using statistical approaches, regression modelling, and
trend detection to find patterns, correlations, and causal connections. Econometric models will be
used to quantify the strength and relevance of these associations while exploratory data analysis
will be used to acquire preliminary insights into the relationship between macroeconomic
conditions and financial market performance. This study seeks to give a thorough understanding
of the impact of macroeconomic factors on financial market dynamics by looking at historical
data across a pertinent time period.

Case studies will be done to delve deeper into certain instances or times when macroeconomic
factors significantly influenced the development of financial markets in order to deepen the
analysis. These case studies will concentrate on pivotal events like financial crises, significant
policy changes, or economic recessions, giving researchers the chance to explore how
macroeconomic issues affect particular financial products, industries, or asset classes. Through
meticulous examination and detailed analysis, these case studies will contribute to a deeper
understanding of the mechanisms through which macroeconomic factors influence market
volatility, investor sentiment, and financial market outcomes.

This study acknowledges the significance of comprehending investor behaviour in the context of
macroeconomic conditions in addition to the quantitative analysis. In order to learn more about
investors' perspectives, decision-making processes, and investment strategies in relation to
macroeconomic issues, surveys and interviews will be undertaken to obtain information and
opinions from investors. This qualitative investigation will contribute to a more thorough
understanding of the relationship between macroeconomics and financial markets by offering
insightful information on the impact of investor sentiment, risk perceptions, and information
processing on market dynamics.

The implications of this research extend to a broad range of stakeholders. Investors stand to
benefit from a nuanced understanding of how macroeconomic factors interact with financial
markets, allowing them to make informed investment decisions and adjust their strategies to
prevailing macroeconomic conditions. Policymakers and regulators can leverage these insights to
design effective measures and policies that promote financial stability,

10
control systemic risks and promote long-term economic expansion. The findings can be used by
financial institutions to create strong risk management frameworks, improve investment plans,
and offer clients personalised solutions.

It is crucial to recognise the constraints and difficulties that come with performing this kind of
research. Macroeconomics and financial markets are both dynamic and complicated, which
presents uncertainties that could affect the veracity and generalizability of the results.
Additionally, there are issues that need to be properly addressed, including data restrictions and
possible endogeneity problems. However, this initiative aims to add to the body of knowledge on
the effects of macroeconomic issues on financial markets, providing insights that can guide
decision-making and influence the direction of the financial industry.

Macroeconomic factors' impact on the financial markets is an interesting and important field of
research. By examining historical data, performing case studies, and investigating investor
behaviour, this initiative aims to reveal the complex relationships and dynamics between
macroeconomics and financial markets. It seeks to deepen our understanding of how
macroeconomic issues affect financial market performance and offer insightful information to
investors, decision-makers, and financial institutions working in a dynamic economic
environment. This study aims to add to the body of information that supports sound financial
decision-making by filling in gaps in the existing literature and providing fresh viewpoints.

Stock Market:

People can buy and sell shares in publicly traded corporations on the stock market. It provides a
platform to enable simple share exchange. It is crucial to remember that a registered intermediary
known as a stock broker is the sole way for an individual to trade on the stock market. Shares are
purchased and sold through electronic means.

Stock markets play a vital role in the financial sector of every economy. An efficient capital
market drives the economic growth by stabilising the financial sector. In an efficient capital
market, stock prices adjust swiftly according to the new information available. The stock prices
reflect all information about the stocks and also the expectations of the future performances of
corporate houses. As a result, if stock prices reflect these assumptions in real, then it should be

11
used as a major indicator for the economic activities (Ray, 2102). Hence the dynamic
relationship between stock prices and macroeconomic variables contains academic interest as
well as policy implications.

The majority of trades in India are conducted on the Bombay Stock Exchange (BSE) and the
National Stock Exchange, which are the two primary stock exchanges (NSE). Other regional
stock markets exist in addition to these two, such as the ones in Bangalore, Madras, and other
cities, although they no longer serve any purpose.

Bombay stock exchange:

The earliest and biggest stock exchange in India, the Bombay Stock Exchange (BSE), was
founded in 1875 as the Native Share and Stock Brokers' Association. By offering an effective
venue for the Indian corporate sector to raise investment money, the BSE has contributed
significantly to the growth of India's capital markets. The BSE is renowned for its quick and
effective trade execution provided by its electronic trading system. Investors can trade in
equities, foreign exchange, debt instruments, derivatives, and mutual funds on the BSE. Other
significant capital market trading services are also offered by the BSE, including risk
management, clearing, settlement, and investor education.

National Stock Exchange:

Technology is what drives the NSE exchange. The NSE has established its trading system as a
fully automated, screen-based, national trading system. Its goal is to be a top-notch exchange and
serve as a tool for change for the entire industry. The NSE was established in 1992, and in April
1993 it received accreditation as a stock exchange. Beginning with trading on the Whole Sale
Debt Market Segment, it began operations in June 1994. Later, it introduced the Futures and
Options Segment in June 2000 for a variety of derivative products, and the Capital Market
Segment in November 1994 as a trading platform for stocks.

Leading financial institutions, banks, insurance firms, and other financial intermediaries
collectively hold the NSE. Professionals who do not directly or indirectly transact on the
Exchange oversee it. Trading members who provide their services to investors hold the trading
rights.

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Sensex and Nifty:

Sensex and Nifty are stock market indices, whereas BSE and NSE are stock marketplaces. The
real-time market movements are quantitatively summarised by a stock market index. In order to
build a stock market index, comparable types of stocks are chosen from a market or exchange
and grouped together. The Bombay Stock Exchange's stock market index is called Sensex, which
stands for "Stock Exchange Sensitive Index." It computes the BSE movement. The index for the
National Stock Exchange is called Nifty, which stands for "National Stock Exchange Fifty."

Introduction to selected macroeconomic variables:

1. Exchange rates: The rate at which one currency will be exchanged for another is known
as the exchange rate in the world of finance. Any nation's imports and exports are based
on the value of its currency at the time. According to the underlying idea, when the
domestic stock market increases, it offers investors hope that the nation's economy would
follow suit, increasing interest from overseas investors and driving up demand for the
local currency. If the stock market underperforms, on the other hand, investor confidence
plummets and foreigners return their money to their home currencies.
2. Inflation rate: The loss of a currency's relative purchasing power over time is referred to
as inflation. Because it impacts every sector of the economy, inflation is bad for business.
The stock market and inflation show a bad relationship. Savings and spending by
consumers are eroded by inflation. Spending cuts automatically result in a drop in
business earnings.
3. Gold price: Due to its value as a valuable asset, gold has been valued since the beginning
of time. It has served as a social status symbol and is regarded as an investment by the
general public. In general, there is an inverse relationship between the price of gold and
that of stocks because, when gold prices decline, investors diversify their holdings from
gold to stocks, and vice versa.
4. Interest Rate: The cost of borrowing money or the return on savings are both expressed
as interest rates. It is calculated as a % of the borrowed or saved amount. When you
obtain a home mortgage, you borrow money from banks. You can use other loans to

13
 finance your schooling, purchase an appliance, or get a car. Banks use your deposits as
collateral for loans, and they reimburse you for the usage of your deposits with interest.
They fund loans using the money from deposits. Changes in interest rates have an effect
on the economy and stock markets because they affect how expensive it is for people and
businesses to borrow money. Any effects of a shift in the economy on the stock market
5. Foreign Exchange Reserve: Assets held in reserve by a central bank in foreign
currencies are known as foreign exchange reserves. Foreign money, bonds, treasury bills,
and other government instruments may be among them. The liabilities are paid from
these reserves. liabilities. It serves as a barrier for a nation against unplanned emergencies
and economic shock. It maintains the stability of the currency and is a tool for monetary
and exchange policy. It has a favourable connection to the stock market. If a country has
larger foreign exchange reserves, investors will be more willing to invest. More reserves
imply greater confidence in the economy, which naturally encourages both domestic and
foreign investors to increase their stock market investments.

14
Chapter 2: Literature
Review

15
Garg K. and Kalra R. (2018) conducted a study on Impact of macroeconomic variables on
Indian stock market. The study's goal is to examine the connection between certain
macroeconomic variables and the price of Indian stocks. The analysis of the impact of chosen
macroeconomic variables on stock market price returns in this study may also help investors
make purchasing and selling decisions about securities. By examining the correlation between
the dependent (Sensex) and independent variables, this study may also enable investors to make
more informed decisions (Macroeconomic factors). To determine the link between the dependent
and independent variables, Pearson correlation is utilised as part of the study's descriptive
technique. For the study, data from 1991 to 2017 were used. The outcome demonstrates a
favourable association.

Dr. Venkatraj. B (2014) conducted an empirical study on Impact of macroeconomic variables

on Indian stock market. Using monthly data, the study examines the relationships between the
performance of the Indian stock market (BSE Sensex) and five macroeconomic variables,
including the index of industrial production, the wholesale price index, the price of gold, foreign
institutional investment, and the real effective exchange rate. Secondary sources are used to
gather the necessary data. This essay's primary goal is to analyse how certain macroeconomic
fundamentals affect the performance of the BSE Sensex. For this, a multiple regression technique
is used. The study found that industrial production, the wholesale price index, and foreign
institutional investment have a significant beneficial impact on BSE stock. Additionally, the
stock market will plummet and the price of gold will rise. The most recent inflation, institutional
foreign investment, and exchange

Ms. Aanchal (2017) has conducted a research on Impact of macroeconomic variables on

Indian stock market. In relation to India, the study seeks to determine whether an increase in
macroeconomic indicators causes an increase in the stock market. GDP, inflation, exports,
imports, and investment are the five macroeconomic indicators selected for the study, while the
CNX Nifty 50 market indices are used as a proxy for stock market performance. The study
makes use of data spanning eleven years, from 2004 to 2015. The study indicated that there was
no correlation between the factors analysed and the Indian stock market indexes using the
Granger Causality Test. However, it is discovered that over the analysed period, GDP is what
drives exports and inflation drives GDP. Testing for correlation between

16
Sharma G. and Mahendru M. (2010) conducted a research on Impact of macroeconomic
variables on stock prices in India. The article examines the long-term relationships between
macroeconomic factors such as the gold price, inflation rate, foreign exchange reserve, and
exchange rate change with the BSE. Galton (1877) used the multiple regression equation model
to examine the connection between these variables. The study was conducted from January 2008
to January 2009. The empirical findings show that there is a strong correlation between the
exchange rate and gold prices and stock prices. On the other hand, the influence of foreign
exchange reserves and inflation on stock prices can only be felt to a limited extent.

Keswani and Wadhwa B. (2019) has conducted A study on evaluating the impact of
macroeconomic variables on Indian stock market. The study looked at how specific
macroeconomic factors—including disposable income, interest rates, governmental policies,
inflation, and currency rates—affected the performance of the National and Bombay stock
exchanges' securities markets. ADF, correlation, multiple regression, and the Granger causality
test were used in the analysis to determine the relationship between the selected parameters. The
study period was evaluated using monthly data from 2006 to 2016 (10). The results demonstrated
that the variables are stationary in the first difference. The currency rate, share price, and
government policies all have a significant impact on disposable income. This implies that the
stock prices on the NSE and BSE will be impacted if these variables change. Additionally, there
is a negative correlation between interest rates and the NSE and BSE.

Makan, Chandni and Ahuja, Kaur A. and Chauhan, Saakshi (2012) has conducted A study
of effect of macroeconomic variables on stock market: Indian perspective. The study looked
at how specific macroeconomic factors—including disposable income, interest rates,
governmental policies, inflation, and currency rates—affected the performance of the National
and Bombay stock exchanges' securities markets. ADF, correlation, multiple regression, and the
Granger causality test were used in the analysis to determine the relationship between the
selected parameters. The study period was evaluated using monthly data from 2006 to 2016 (10).
The results demonstrated that the variables are stationary in the first difference. The currency
rate, share price, and government policies all have a significant impact on disposable income.
This implies that the stock prices on the NSE and BSE will be impacted if these variables
change. Additionally, there is a negative correlation between interest rates and the NSE and

17
BSE.is study aims to investigate the relationship between Indian stock market and selected
macroeconomic variables. To examining the existence of correlation between stock price &
macroeconomic variables & the extent to which they are correlated. The study is based on
secondary data. The tools used for research is regression model, correlation matrix and Granger
causality test. The research concluded that the seven macroeconomic variables out of three
variables will influence the Indian stock market. These factors are exchange rate, foreign
institutional investment and call rate. There is a positive relation between FII and Sensex, call
rate and Sensex whereas exchange rate and Sensex shows a negative relation. the granger
causality test in which call rate has been seen as affecting BSE in almost all the sectors (except
FMCG sector) and regression analysis in which exchange rate and FII is affecting all the sector.
This simply concludes that in long term the Indian stock market is more driven by domestic
macroeconomic factors rather than global factors.

Mishra V. and Dr. Kumar A. (2018) conducted a research on Impact of macroeconomic

variables on Indian stock market. The study looks into the connections between several
macroeconomic factors and the Indian stock market. Interest rates, inflation rates, money supply,
and currency rates are among the macroeconomic factors covered in the study. The BSE Sensex
has been used as the benchmark for the Indian stock market. As a sample for the study, monthly
data for the years from to have been used. The research reveals that, with the exception of the
money supply, there is a long-term relationship between macroeconomic factors and the stock
market. There is also a short-term causal relationship between the macroeconomic factors and
the stock market. The interest rate and the BSE Sensex are determined to have a bidirectional
causal relationship.

Robert D. Gay, Jr. (2008) explicated the relationship between stock market index and the
macroeconomic variables of oil price and exchange rate for Brazil, India, China and
Russia. For the purpose of data analysis, the monthly average of reputable stock market indices,
oil prices, and currency rates from 1999 to 2006 are looked at. The Stock Market Index was
employed as the dependent variable, and the connection between it and the independent variables
was examined using the Box Jenkins Autoregressive Integrated Moving Average (ARIMA) time
series technique (Exchange rate and oil price). It was discovered that there was no substantial

18
correlation between the exchange rate and oil price, which are global macroeconomic factors,
and the stock market exchange index in Brazil, Russia, China, and India.

Patel J. and Donga G. (2021) conducted a research on Impact of macroeconomic variables on

Indian stock market. The primary goal of this study is to determine how certain
macroeconomic indicators and the Indian stock market are related. Additionally, it sought to
understand how particular macroeconomic factors impact stock performance. There are seven
macroeconomic variables: the gross domestic product, the money supply, the exchange rate, the
foreign currency reserve, the price of gold, the interest rate, and the inflation rate. The BSE
SENSEX stock price and the NSE Nifty 50 stock price are the dependent variables.
Macroeconomic factors and stock price were obtained for the study's time frame of January 2016
to December 2020 using quarterly data. The association was investigated using a correlation
matrix analysis and a linear regression analysis. The interest rate and the gross domestic product
have been discovered to have a negative association with the price of BSE stocks in the
correlation matrix of the BSE SENSEX. The inflation rate, interest rate, and gross domestic
product all show negative correlations with NSE stock price in the NSE Nifty 50 correlation
matrix. The results of the linear regression study show that the money supply, foreign exchange
reserves, interest rate, and gross domestic product all positively correlate with the price of BSE
stocks.

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Chapter 3: Research
Methodology
Research Methodology:

Research methodology is the specific procedures or techniques used to identify, select, process,
and analyze information about a topic. In a research paper, the methodology section allows the
reader to critically evaluate a study’s overall validity and reliability. The methodology section
answers two main questions: How was the data collected or generated? How was it analyzed?

Problem Statement:

"A STUDY ON IMPACT OF MACROECONOMIC VARIABLES ON THE INDIAN STOCK

MARKET.”

Variables selected:

 Inflation rate
 Exchange rate
 Interest rate
 Foreign exchange reserve
 Gold price

Objective:

 To investigate the impact of selected five macroeconomic variables namely exchange

rate, inflation rate, interest rate, gold price and foreign exchange reserve on stock market.
 To determine how the selected variables affect the performance of stock in the market.

Research Design

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  Descriptive Research design is used for this study.

Data collection

Primary data:

Primary data is the data that is collected for the first time through personal experiences or
evidence, particularly for research. It is also described as raw data or first-hand
information

Secondary data:

Secondary data is the data that has been collected in the past by someone else but made
available for others to use. They are usually once primary data but become secondary
when used by a third party. Secondary data are usually easily accessible to researchers
and individuals because they are mostly shared publicly.

Here, in this study secondary data is used, which are gathered from different sources like
yahoo finance and from RBI database.

Data period

 The data are of last five years (2016-2020)

Tool used for data analysis

Here, in this research I have used Regression Analysis and Correlation Matrix in for data
analysis.

Statement Hypothesis

Null Hypothesis:

H0: There is no significant relationship between NSE Nifty 50 and the selected
macroeconomic variables.

Alternative Hypothesis:

21
 Ha: There is a significant relationship between NSE Nifty 50 and selected
macroeconomic variables.

Chapter 4: Data Analysis and

Interpretation

22
Description of Data

Name of Variables Symbol Units

NSE Nifty 50 NSE Rupees

Exchange Rate ER Rupees

Inflation Rate IR Percentage

Gold Price GP Rupees

Foreign Exchange Reserve or Forex FER Rupees

Reserve
Interest Rate Int.R Percentage

Descriptive statistics

Mean Standard Sum Minimum Maximu Range

m
Deviation

23
 NSE 10262.59 1463.333 615755.5 6987.05 13981.75 6994.7

ER 69.03729 3.53513 4142.237 63.64053 76.22233 12.5818

IR 4.571833 1.615732 274.31 1.46 7.61 6.15

GP 35221.7 7760.182 2113302 26851 56091 29240

FER 28583.54 6240.09 1715012 2369.4 42753.61 40384.21

Int.R 10.10067 0.671882 606.04 8.66 11.43 2.77

Interpretation:

The NSE Nifty 50 has a mean value of 10262.59 and a standard deviation of 1463.333. Although
the highest price is 13981.75 and the lowest is 6987.05. The average of the exchange rate,
inflation rate, gold price, foreign exchange reserve, and interest rate is 69.037; it is also 4.571; it
is 35221.7; it is 28583.54; and it is 10.100. Additionally, the corresponding standard deviations
are 3.535, 1.615, 7760.182, 6240.09, and 0.671.

Correlation Analysis:

A statistical technique called correlation analysis is used to determine whether or if there is a

relationship between two variables or datasets and how strong that relationship might be. This
means that, in terms of market research, correlation analysis is used to examine quantitative data
acquired from research techniques like surveys and polls, in order to determine whether there are
any notable relationships, patterns, or trends between the two. A high or strong correlation
indicates a significant association between two or more variables, whereas a low or weak
correlation indicates that the variables are rarely related. The range of correlation coefficients is

24
from -1.00 to +1.00. A perfect negative correlation is shown by the number -1.00, whereas a
perfect positive correlation is shown by the value +1.00. Zero indicates that there is no value.

Correlation matrix:

NSE ER IR(%) GP FER Int.R

(%)
NSE 1
ER 0.424159 1
IR(%) 0.118371 0.478154 1
GP 0.484259 0.818206 0.68436 1
FER 0.674019 0.715721 0.492208 0.843948 1
Int.R -0.51646 -0.43534 -0.40964 -0.70721 - 1
(%) 0.72656

Interpretation:

The aforementioned table reveals that the inflation rate has a very strong negative association
with the NSE stock prices, which are around (-0.516). Therefore, it can be argued to have
influenced the NSE stock prices. The association between the stock prices on the NSE and the
exchange rate, inflation rate, gold price, and forex reserve is positive. The connection between
foreign exchange reserves is high and positive at (0.674). The correlation between the inflation
rate and the correlation is low (0.118). And the correlation between the exchange rate and the
price of gold is (0.424) and (0.484), indicating a moderate association with the price of NSE
stocks.

Regression Analysis:

Regression analysis is a set of statistical methods used for the estimation of relationships
between a dependent variable and one or more independent variables. It can be utilized to assess
the strength of the relationship between variables and for modeling the future relationship
between them.

Regression analysis includes several variations, such as linear, multiple linear, and nonlinear. The
most common models are simple linear and multiple linear. More specifically, regression

25
analysis helps to understand how the dependent variable change when one of the independent
variables varies, while the other independent variable held fixed.

The regression model involves the following parameters and variables:

The unknown parameters, denoted as β, which may represent a scale or vector.

The dependent variables Υ.

The independent variables Χ.

Υ = β0 + β1Χ1 + β2Χ2 + β3X3 + β4X4 + β5X4

Where,

Υ = Stock prices of NSE Nifty 50

X1 = Exchange Rate

X2 = Inflation Rate

X3 = Gold Price

X4 = Forex Reserve

X5 = Inflation Rate

Coefficientsa
Model Unstandardized Standardized T Sig.
Coefficients Coefficients

B Std. Error Beta

1 (Constant)
8725.825 4622.224 1.888 .064

ER 2.129 76.713 .005 .028 .978

IR -232.917 123.858 -.257 -1.881 .065
GP -.017 .055 -.091 -.313 .756
FER .187 .045 .798 4.117 .000

26
 IntR -226.730 343.277 -.104 -.660 .512
a. Dependent Variable: NSE

H0: There is no significance relationship between selected macroeconomics variables and NSE
Nifty 50.

Ha: There is a significance relationship between selected macroeconomics variables and NSE
Nifty 50.

Inflation rate and forex reserve P-values are less than the threshold P-value of 0.05, according to
the preceding regression table, thus we reject the null hypothesis and accept the alternative one.
This indicates that the NSE Nifty 50 and the inflation rate have a considerable relationship. The
P-values of the interest rate, gold price, and exchange rate are all higher than the threshold P-
value of 0.05, thus we accept the null hypothesis and rule out the alternative. This indicates a
significant relationship with the NSE Nifty 50.

Υ = β0 + β1Χ1 + β2Χ2 + β3X3 + β4X4 + β5X4

NSE Nifty 50 = (8725.825) + (2.129) ER + (-232.917) IR + (-0.017) GP + (0.187) FER + (-

226.730) IntR

Interpretation:

By interpreting the regression equation, we may deduce that an increase of one point (unit) in the
exchange rate and the foreign reserve can result in increases of 2.129 and 0.187, respectively, in
the NSE Nifty 50. Variables in this case have a beneficial effect on NSE stock prices. The NSE
prices, however, decline by (-232.917), (-0.187), and (-226.730), respectively, when the inflation
rate, gold prices, and interest rate increase by one point (unit).

27
Chapter 5: Findings

28
Findings

 Interest Rate has a strong negative link with NSE nifty 50 stock prices, according to the
correlation matrix (-0.516). The prices of NSE stocks are positively correlated with the
exchange rate, inflation rate, gold prices, and foreign exchange reserves. The correlation
between the Forex reserve and inflation rate is about (0.674), and the correlation between
the two is about 0. (0.118). While the relationship between the price of gold and the
exchange rate is moderately favourable (0.424) and (0.484), respectively.
 According to regression research, an increase of one point (unit) in either the exchange
rate or the foreign exchange reserve will result in a 2.129 or a 0.187 increase in the price
of an NSE stock, respectively. This indicates that this variable has a favourable effect on
the prices of NSE stocks. The NSE stock prices will decline by (- 232.917), (-0.187), and
(-226.730), respectively, as a result of the one point (unit) rises in the inflation rate, gold
price, forex reserve, and interest rate.

29
Chapter 6: Conclusion
30
Conclusion

The study's goal is to determine how certain macroeconomic factors relate to the Indian stock
market (NSE Nifty 50). Additionally, to ascertain how the stock's performance is impacted by the
chosen variables. The study comes to the conclusion that, in the correlation matrix, interest rates
have not had an impact on the NSE Nifty 50 stock market, but the other four have. Exchange rate
and Forex reserve have a favourable effect on NSE stock prices in regression analysis.
Additionally, the NSE Nifty 50 stock prices are negatively impacted by the inflation rate, gold
prices, and interest rates.

31
Chapter 7: Bibliography
32
Aanchal, M. (2017). IMPACT OF MACROECONOMIC VARIABLES ON INDIAN STOCK
MARKET. SSRG International Journal of Economics and Management Studies.

B, D. V. (2014). IMPACT OF MACROECONOMIC VARIABLES ON STOCK MARKET

PERFORMANCE IN INDIA: AN EMPIRICAL ANALYSIS. International Journal of Business
Quantative Economics and Applied Management.

GD Sharma, M. M. (2010). IMPACT OF MACROECONOMIC VARIABLES ON STOCK

PRICES IN INDIA.

Patel J., D. G. (2021). A STUDY ON IMPACT OF MACROECONOMICS VARIABLES ON

INDIAN STOCK MARKETS. International Journal of Research in Management and Business
Studies.

Karla, K. G. (2018). IMPACT OF MACROECONOMIC FACTORS ON INDIAN STOCK

MARKET. KIIT Journal of Management.

Makan, C. a. (2012). A STUDY OF EFFECT OF MACROECONOMIC VARIABLES ON

STOCK MARKET: INDIAN PRESPECTIVE.

33
Robert D. Gay, J. (2008). EFFECT OF MACROECONOMIC VARIABLES ON STOCK
MARKET RETURNS FOR FOUR EMERGING ECONOMIES: BRAZIL, RUSSIA, INDIA,
AND CHINA. International Business and Economics Research Journal.

Sarika keswani, B. W. (2019). EVALUATING THE IMPACT OF MACRONOMIC

VARIABLES ON INDIAN STOCK MARKET. International Journal of Engineering and
Advanced Technology.

Vikash Mishra, A. K. (2018). IMPACT OF MACROECONOMIC VARIABLE ON INDIAN

STOCK MARKETS. Journal of Advances and Scholarly Researches in Allied Education.

http://www.investopedia.com/

http://in.finance.yahoo.com/

https://www.dbie.rbi.org.in/

34
Chapter 8: Annexure

Dependent variable

 NSE Nifty

2016 2017 2018 2019 2020

Jan 7563.55 8561.3 11027.7 10830.95 11962.1
Feb 6987.05 8879.6 10492.85 10792.5 11201.75
Mae 7738.4 9173.75 10113.7 11623.9 8597.75
Apr 7849.8 9304.05 10739.35 11748.15 9859.9
May 8160.1 9621.25 10736.15 11922.8 9580.3
Jun 8287.75 9520.9 10714.3 11788.85 10302.1
Jul 8638.5 10077.1 11356.5 11118 11073.45
Aug 8786.2 9917.9 11680.5 11023.25 11387.5
Sep 8611.15 9788.6 10930.45 11474.45 11247.55
Oct 8638 10335.3 10386.6 11877.45 11642.4

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 Nov 8224.5 10226.55 10876.75 12056.05 12968.95
Dec 8185.8 10530.7 10862.55 12168.45 13981.75

Independent Variable

 Exchange Rate

2016 2017 2018 2019 2020

Jan 67.2355 68.06723 63.64053 70.64837 11962.1
Feb 68.25507 66.96891 64.44805 71.21129 11201.75
Mae 66.92511 65.87335 65.04643 69.5817 8597.75
Apr 66.46313 64.53096 65.6832 69.41085 9859.9
May 66.90516 64.42152 67.52494 69.76727 9580.3
Jun 67.24605 64.4455 67.787 69.41914 10302.1
Jul 67.16126 64.44309 68.66395 68.74633 11073.45
Aug 66.93551 63.92034 69.55324 71.12515 11387.5
Sep 66.76368 64.43213 72.09534 71.30452 11247.55
Oct 66.72846 65.0881 73.58726 71.00149 11642.4
Nov 67.73135 64.85961 71.78642 71.47563 12968.95
Dec 67.81351 64.20973 70.71964 71.17271 13981.75

 Inflation rate

2016 2017 2018 2019 2020

Jan 67.2355 68.06723 63.64053 70.64837 71.2646
Feb 68.25507 66.96891 64.44805 71.21129 71.58383
Mae 66.92511 65.87335 65.04643 69.5817 74.5349
Apr 66.46313 64.53096 65.6832 69.41085 76.22233
May 66.90516 64.42152 67.52494 69.76727 75.66606
Jun 67.24605 64.4455 67.787 69.41914 75.76343
Jul 67.16126 64.44309 68.66395 68.74633 74.90899
Aug 66.93551 63.92034 69.55324 71.12515 74.57382
Sep 66.76368 64.43213 72.09534 71.30452 73.51757
Oct 66.72846 65.0881 73.58726 71.00149 73.53172
Nov 67.73135 64.85961 71.78642 71.47563 74.20114

36
Dec 67.81351 64.20973 70.71964 71.17271 73.64415

 Gold price

2016 2017 2018 2019 2020

Jan 26851 28803 30454 32969 41271
Feb 29976 29646 30828 34002 43698
Mae 30113 29566 30927 33001 44913
Apr 30216 29514 31598 32294 47293
May 30493 28986 31565 32532 47919
Jun 31826 29567 31405 34839 48544
Jul 32336 28592 30772 35382 53332
Aug 31900 29893 30230 39383 56091
Sep 31435 30428 30917 39846 52161
Oct 30815 29945 32278 38569 51427
Nov 31079 29720 30276 38584 52484
Dec 28500 29209 32045 39091 50973

 Forex reserve

2016 2017 2018 2019 2020

Jan 23089.2 24393.1 26067.1 27671 33110.99
Feb 2369.4 24467 27023.4 28459.6 33781.3
Mae 23500.6 24316.7 27435.7 28519.1 35924.35
Apr 23759.7 23765.2 27607 28631.7 36070.76
May 23990.8 24155.5 29762.8 29014.7 36122.74
Jun 24311.4 24553.1 27690.8 29364.5 37920.13
Jul 24363.3 25006.7 27930.3 29471.3 38309.97
Aug 24325.3 25070.7 27685.8 29811.19 40326.58
Sep 24467.4 25469.3 28670.1 30779.88 39641.98
Oct 24454.8 26008.9 29362.7 31058.71 39908.23

37
Nov 24508.4 25748.5 28659.6 31312.42 42188.23
Dec 24861 25894.1 27765.2 32348.73 42753.61

 Interest rate

2016 2017 2018 2019 2020

Jan 11.43 10.39 9.62 10.69 10.19
Feb 11.06 10.36 9.94 10.65 10.27
Mae 10.97 10.12 9.87 10.59 9.29
Apr 11.02 10.04 9.99 10.37 8.91
May 11.09 10.26 9.91 10.59 9.21
Jun 10.84 9.75 9.92 10.32 8.74
Jul 10.94 10.05 10.1 10.35 9.12
Aug 11.07 9.74 10.09 10.2 8.81
Sep 10.99 9.59 10.06 10.18 8.66
Oct 10.99 9.62 10.37 10.29 9.02
Nov 10.76 9.75 10.42 10.21 8.93
Dec 10.51 9.52 10.44 10 8.86

38