IMPACT OF INTEREST RATE MOVEMENT ON INDIAN STOCK MARKET INDICES
Abstract
This research looks at how interest rates (10-year T-bill rate) affect the Indian stock market Index. This study's time frame is the underlying series is tested as quasi at the level but stationary in the first difference using the Augmented Dickey-Fuller unit root test. Bidirectional links are shown using the Granger causality test. Interest rates and the stock market index are causally related in both directions (Nifty 50 and Nifty Midcap 100). As a result, it is now feasible to estimate stock prices using changes in interest rates, which may help with economic forecasting, planning, and growth. The main finding of this research is that interest rate effects must be taken into consideration while analysing the dynamics of Nigeria's stock market behaviour. In order to encourage the expansion of the Indian stock market, we advise the implementation of suitable macroeconomic policies that are supportive of the stock market index (a proxy for stock prices).
Keyword : Stock Market Index, Interest rate, Granger Causality Test
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