Sandeep Vyas
The emerging markets owing to their growth potentials have become favored investment destinations for international investors even after considering the risky nature of foreign markets. The research paper examines macroeconomic variables that are assumed to influence stock market returns in India. It attempts to identify whether any causal relationship exists between the stock market returns and macroeconomic indicators by using regression analysis. The indicators that have been taken into account are Index of Industrial Production (IIP) as a proxy for Gross Domestic Product (GDP), Wholesale Price Index (WPI) as a proxy for inflation, Money Supply M1 (MSM1), Rupee Dollar Exchange Rate (REDOLLXR), Foreign Portfolio Investment (FPI in equity only) and Federal Reserve Rates (FRR) on S & P BSE SENSEX index (BSESENX).