Performance of the Indian Stock Market in Relation to Macroeconomic Indicators during the Pre-Corona Pandemic Period

Abstract

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Purpose: This study examines the performance of macroeconomic variables in gaining profits from stock investments in India’s stock market during the pre-corona pandemic period. Design/Methodology/Approach: The data was gathered from the Indian Economy’s Handbook of Statistics for six years, from 2014 to 2019. To examine the relationship between macroeconomic factors and stock indices, the OLS regression model, ADF test, and Granger causality technique were used. The VECM technique was used to determine the link between the variables’ switching performance during the pre-corona epidemic phase. Findings: This study finds a substantial association between the factors and the stock market. During the pre-corona pandemic phase, the link is also bidirectional with the stock market. Implications: This study will assist investors in making critical decisions in the sphere of investment and investment diversification. Originality: The current study gives important hints for investors who want to build a well-defined, diversified portfolio. Since it is critical to maintain control over the psychological impact of socio-economic limitations on investors, it is recommended that investors keep their eyes open when making investment selections.

Keywords: Macroeconomics, OLS Model, ADF Test, VAR Model, VECM, Indian Stock Market

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