Exploring The Dynamic Relationship between MacroeconomicVariables ‎on India’s Premier Benchmark Sensex 30 Index

  • Authors

    • Vishweswarsastry V N Department of Commerce, Manipal Academy of Higher Education Manipal, India https://orcid.org/0000-0002-2808-3173
    • Guruprasad Desai D. R Department of Commerce, Manipal Academy of Higher Education Manipal, India
    • Manjushree Academic Audit & Asst Professor, Presidency University Bangalore, Karnataka, India
    • Narasimha Murthy H Department of Professional Studies, School of Commerce, Finance and Accountancy, CHRIST University, Bangalore, India https://orcid.org/0000-0001-7921-0454
    • Kantharaju N P Department of Professional Studies, School of Commerce, Finance and Accountancy, CHRIST ‎University, Bangalore, India https://orcid.org/0009-0004-4473-5612
    https://doi.org/10.14419/4jzk6k89

    Received date: June 21, 2025

    Accepted date: August 4, 2025

    Published date: August 24, 2025

  • Cointegration; Econometrics; Multicollinearity; OLS; VECM ‎JEL: G1; G40; O16

  • Abstract

    The purpose of the study is to examine the impact of macroeconomic ‎indicators on the closing prices of the BSE Sensex 30, a key benchmark index in ‎India known for its volatility in response to economic conditions. This research ‎is particularly relevant in the context of economic shocks, as it aims to ‎recommend the adoption of appropriate economic policies that could benefit ‎the stock market index, ultimately advancing growth in the capital market. ‎Using the ordinary least squares (OLS) method, the study analyzes the effect of ‎various macroeconomic variables on the BSE Sensex. Additionally, the ‎complex relationship between these variables is explored using the Johansen ‎Cointegration test and evidenced through the Vector Error Correction (VECM) ‎model. The findings reveal that GDP, the Index of Industrial Production (IIP), ‎India’s foreign trade, gold prices, Foreign Direct Investment (FDI), and money ‎supply significantly influence the BSE Sensex. However, External ‎Commercial Borrowing, the Consumer Price Index (CPI), exchange rates, and ‎foreign exchange, which showed the highest Variance Inflation Factors (VIF), ‎were excluded from the study based on OLS results. In conclusion, the study ‎advocates for the implementation of suitable economic policies that support ‎the stock market, thereby aligning with investors’ interests and promoting ‎capital market growth‎.

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  • How to Cite

    N , V. V., R, G. D. D. ., Manjushree, H, N. M. ., & P, K. N. . (2025). Exploring The Dynamic Relationship between MacroeconomicVariables ‎on India’s Premier Benchmark Sensex 30 Index. International Journal of Accounting and Economics Studies, 12(4), 598-606. https://doi.org/10.14419/4jzk6k89