Journal of Contemporary Issues in Business and Government

Abstract

In this study, we use multivariate stepwise regression analysis to examine how various
macroeconomic factors have affected the Indian stock market. To investigate the underlying
dynamic causal relationship between the variables,a Granger causality test was performed and
Average monthly closing prices of BSE Sensex and S&P CNX Nifty are used as dependent
variables, while industrial production (IIP), wholesale price index (WPI), money supply (M3),
interest rates (IR), trade deficit (TD) and investment are institutional variables. Foreign exchange
(FII), exchange rate (ER), crude oil price (CP), and gold price (GP) are used as independent
variables (GP).Data from January 2020 through June 2022 was evaluated for this analysis. The
empirical findings of this study feature the significance of macroeconomic factors in explaining
the behavior of the Indian stock market. Investors' inclination for gold has to be tempered, and
the government should instead encourage further participation in the stock market.