ANALYSIS OF STOCK MARKET FLUCTUATIONS AND GLOBAL ECONOMIC CONDITIONS- A REVIEW
Abstract
The consideration of macroeconomic factors holds significant value in the process of decision-making. An assessment of the macroeconomic milieu is imperative in order to scrutinise the conduct of equity prices, which in turn impacts the investment proclivities of investors. Whilst certain macroeconomic factors may not exhibit a direct correlation to a given company or industry, it is important to acknowledge their influence on stock prices. The broader economic landscape, both domestically and globally, can significantly impact the stock market and its subsequent activity. The correlation between the rapid expansion of a nation's economy and the subsequent acceleration of its industrial sector is a well-established phenomenon. Conversely, a sluggish industrial growth can impede the overall economic progress of a country. The pivotal function of the financial market in the economic system of a nation cannot be overstated. The stock market is a dynamic marketplace where investors engage in the exchange of securities issued by listed companies. This highly responsive market provides a platform for investors to allocate their capital across a diverse range of securities. Market indices serve as a means of quantifying the efficacy of diverse securities within the stock market. Investors leverage these indices to scrutinise the performance of industries in which they are inclined to invest. The present investigation endeavours to scrutinise the correlation between diverse economic variables and the stock market, as scrutinised by the research articles incorporated in the study. The assemblage of research encompassed scholarly articles published in academic journals throughout the decade between 2010 and 2020. The empirical analysis reveals a positive correlation between the price of gold, exchange rate, consumer price index, and interest rate with four indices. Conversely, the price of crude oil and silver exhibit a positive correlation with three indices. The outcome elucidates that investors must duly consider all pertinent variables when making investment decisions and investment bankers must similarly attend to these indicators prior to proffering recommendations to their clientele.
Keyword : stock market, BSE, NSE, SENSEX, NIFTY, macro-economic factors, GDP, FII, FDI, inflation rate, gold prices, oil prices
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