Nifty 50: Caused By Fdi, Wpi and Exchange Rate? | Original Article

ABSTRACT:

The Indian Stock Market Does Not Move In Isolation and Its Returns Are Dependent Upon Economic Parameters. the Later Play a Pivotal Role In Influencing the Returns For Markets. an Investor Who Plugs His Money In the Stock Market May Take into Account the Fluctuations In Such Factors and Accordingly Plan Hisher Portfolio. Index Returns May Have a Causal Association With Many Factors In the Economy Inflation Rates, Interest Rates, Foreign Direct Investment Flows, Exchange Rate Mechanism, Gross Domestic Product, Monetary Policy of Central Bank, Crude Oil Prices to Name a Few. All of Them May Together Contribute Towards Volatility In Stock Returns. Thus, While Designing Strategies of Investment Due Relevance Must Be Given to Them. This Relationship Has Been Tested In Various Time Frames By Taking a Combination of Different Exogenous Factors In Short Run and Long Run. the Present Study Is Emphasized to Establish Association Between Change In the Four Variables and Their Causal Linkages In the Short Run. It Has Been Observed Using Granger Causality That All the Variables Have Causal Relationship During the Short Run.