INVESTIGATING THE EFFECT OF ECONOMIC DETERMINANTS ON STOCK MARKET RETURNS: AN INTROSPECTION
Keywords:
BSE Sensex, Stock Market, FDI, Stepwise Regression, IndiaAbstract
Similar to everything else in life, higher the risk, larger is the return. Distinct from other investment options, stock market investments are riskier but the rewards are also equally handsome and attractive. The foremost reason behind such risk is market volatility or fluctuations. By nature the stock market is exceptionally erratic. Many times for unknown reasons the shares prices can go up or come down randomly. Owing to this impulsiveness, investments in such markets are deemed to be risky proposition. Nevertheless, if time is invested in properly studying the market and its randomness in detail, rewards can be reaped substantially. The foremost step towards this is to comprehend the reasons behind stock price movements. Using step-wise regression this paper examines the impact of few macroeconomic indicators on BSE Sensex. Results suggest a model where FDI significantly influences the fluctuations in the stock market in India.
References
Al Qaisi, F., Tahtamouni, A., & Al-Qudah, M. (2016). Factors affecting the market stock price The case of the insurance companies listed in Amman Stock Exchange. International Journal of Business and Social Science, 7(10), 81-90.
Alam, S., Miah, M. R., & Karim, M. A. (2016). Analysis on factors that affect stock prices: A study on listed cement companies at Dhaka stock exchange. Research Journal of Finance and Accounting, 7(18), 93-113.
Almashaqbeh, M., Islam, M. A., & Bakar, R. (2021, May). Factors affecting share prices: A literature revisit. In AIP Conference Proceedings (Vol. 2339, No. 1, p. 020143). AIP Publishing LLC.
Al-Sadiq, M. A. J. (2013). Outward foreign direct investment and domestic investment: The case of developing countries. International Monetary Fund.
Bhargava, A., Bhargava, A., & Jain, S. (2016). Factors affecting stock prices in India: a time series analysis. IOSR Journal of Economics and Finance. Money, 3(2.672309), 1-323493. Volume 7, Issue 4.
Hung, N. K., Tuan, G. Q., Phuong, D. T. M., & Hien, N. A. (2019). Key factors affecting the stock price of enterprises listed on ho chi minh stock exchange. Academy of Accounting and Financial Studies Journal, 23(6), 1-12.
Jan Knoerich (2017) How does outward foreign direct investment contribute to economic development in less advanced home countries?, Oxford Development Studies, 45:4, 443-459, DOI: 10.1080/13600818.2017.1283009
Mondal, S. A., & Imran, M. S. (2010). Determinants of stock price: a case study on Dhaka stock exchange. International Journal of Finance, 2(3), 1-16.
Narayan, P. K., Narayan, S., & Singh, H. (2014). The determinants of stock prices: new evidence from the Indian banking sector. Emerging Markets Finance and Trade, 50(2), 5-15. 10. Nathani Navita , Saxena Himani , Paramasivam P. , Mishra Poonam , Sharma Nandini, Singh Vimlesh , Kadam Nihal, Jain Ragini; Determinants of Stock Price Movements: Empirical Study of Indian Stock Market. Research Perspectives in Social Sciences. 117-126
Om, H., & Goel, M. S. (2017). Analysis of factors affecting stock price behaviour: A study on listed companies in Bombay stock exchange. Imperial Journal of Interdisciplinary Research, 3(3), 115-119.
Sahoo, P., & Bishnoi, A. (2021). Impact of Outward Foreign Investments: Evidence from Asia. Journal of Policy Modeling. ISSN 0161-8938
Sharif, T., Purohit, H., & Pillai, R. (2015). Analysis of factors affecting share prices: The case of Bahrain stock exchange. International Journal of Economics and Finance, 7(3), 207-216. 14. Singh, D. (2018). Stock price determinants: empirical evidence from Muscat Securities Market, Oman. Firm Value: Theory and Empirical Evidence, 21.
Sukesti, F., Ghozali, I., Fuad, F. U. A. D., Almasyhari, A. K., & Nurcahyono, N. (2021). Factors Affecting the Stock Price: The Role of Firm Performance. The Journal of Asian Finance, Economics, and Business, 8(2), 165-173.
Tsagkanos, A., Siriopoulos, C., & Vartholomatou, K. (2019). Foreign direct investment and stock market development: Evidence from a “new” emerging market. Journal of Economic Studies. 17. Tvaronavičiene, M., & Michailova, J. (2006). Factors affecting securities prices: theoretical versus practical approach. Journal of Business Economics and Management, 7(4), 213-222. 18. https://www.business-standard.com/about/what-is-fdi
https://www.fdi.finance/blog/what-is-fdi-inflow-and-outflow/
https://www.edelweiss.in/investology/introduction-to-stock-markets-51c006/how-stock-prices change-52166b
https://www.adityabirlacapital.com/abc-of-money/factors-affecting-stock-market
