MACROECONOMIC INDICATORS AND NIFTY PERFORMANCE: AN ANALYSIS OF CYCLICAL MARKET EFFECTS

Abstract

In this study, the authors have studied relationship between selected macroeconomic indicators and performance of NIFTY 50 stock index, focusing on the cyclical market aspects during the period from 2016-17 to 2020-21. The study examines how the NIFTY has been affected by inflation, interest rate, exchange rate, industrial production index and crude oil prices, by using the secondary data gathered from trustworthy sources of the economic and financial information. The use of descriptive and analytical methods enables the user to use the trend-relation-variation theory to identify trends, associations and variations throughout the market cycle. The results suggest that macroeconomic conditions positively affect stock-market performance on first sight, but there are different degrees to this affectation. The economies shrink, and NIFTY recovery for a decade, intertwined from the business of 2020-21, clearly demonstrates the pro-activity of equity markets. The study finds that NIFTY movements are a result of the synergistic effect of macro-economic conditions, monetary policy, investor's expectations, and market sentiment.