Abstract
This study investigates the influence of macroeconomic indicators—interest rates, inflation, GDP growth, and exchange rates—on the performance of the Indian banking sector, particularly the BSE Bankex and Nifty Bank Index. The research utilizes historical data from 2010 to 2024, employing statistical techniques such as correlation analysis, regression models, and Granger causality tests to evaluate these relationships. The findings indicate that GDP growth has a strong positive correlation with banking stock indices, reflecting that economic expansion enhances banking stock performance. Exchange rate fluctuations also exhibit a significant positive influence, underlining the role of currency valuation in shaping banking stock trends. Conversely, inflation demonstrates a moderate negative correlation with banking stocks, suggesting that inflationary pressures negatively impact financial performance. Interest rates show a weak inverse relationship with banking stock returns, implying a limited but negative impact of monetary policy decisions on banking sector performance. The study highlights the crucial role of macroeconomic stability in shaping stock market trends and provides valuable insights for investors, policymakers, and financial analysts to formulate effective economic and investment strategies.
Stock Market
References
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Author information
Dr. P. Gnana Soundhari
Assistant Professor, Department of Economics, Arulmigu Palaniandavar Arts College for Women, Palani.