In the global economy, the growth and development of stock market of any country depends on the financial system and economic fundamentals. The well established financial system provides the necessary financial inputs for the production and services. The strong economic policies and economic indicators are support the standard of living of people and influence the growth of an economy. Before, liberalization, privatization and globalization, most of the economy as consider as closed economy, the growth and opportunity was confined within the country. After 1991, Liberalization, Privatization and Globalization was established, the majority of the countries became open economy and highly connected with global market. The macroeconomic variables became the leading indicators are determined the stock market behavior of developing and developed countries, because the stock prices are highly sensitive by changes of macro-economic variables. The Indian stock market plays a pivotal role in the growth of industries and commerce of a country which would affect the economy.
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The stock market growth depends on economic fundamentals and its related issues and problems. The stock market is perceived as a very significant part of the financial sector of any economy. Moreover it plays a vibrant role in the utilization of capital in many of the emerging economies. Generally the stock market is affected by the many factors such as highly interaction of internal and external economy, international political, economic variables, social and investor’s sentiments and also these factors influencing each other in very intricate manner. The impact of economic fundamentals on stock market or stock returns has been a long debated issue amongst the academicians and professionals. Most of the time, stock markets don’t react to certain news at all. In India, economist, analysts and financial policy makers have been doing number of studies on this subject but not yet they have concluded. In the financial market, some analysts were concerned about a Price Bubble created in the stock markets. Normally a financial bubble rise when the market prices are not reflective of the actual reality. In India after LPG, the foreign investments like FII and FDI entered vastly and support the development of economic and financial market. However FDI and FII are affected by the global politics, international market activities, inflation, interest rate and exchange rate. Foreign investments play a vital role in developing economy by adding the saving of low and middle incomes in developing countries, in order to develop their pace of capital and investments. Foreign investments were unproductive to develop the economy of a country by exposing them to undulations of capital inflow or huge outflow of capital. The capital market plays an important role in the capital formation of the any economy. The circumstantial evidence from the financial report indicates that investors generally have faith in that monetary policy and macroeconomic variables events imply the large impact on the volatility of the stock prices. In this context, macroeconomist, financial analyst and policy makers should understand the vigorous behaviour of stock markets and especially investors prospective, the investor’s community interested in understanding the natural behaviour of the stock markets, therefore investment is guided by the volatility span. The financial markets play an important role in the economic stability and also the performance of stock market reveals the economic health of the country. The stock price is varying from time to time depending on such factors like new issues (market information) and financial results, inflation, GDP, Interest Rate, Government policy (credit policy, fiscal policy and monetary policy) and Repo rate. The performance of Indian economy shows better in spite of financial crisis health because of the support of economic policy and its balanced domestic drivers, like infrastructure projects, small and medium enterprises sectors exports and …show more content…
The effects of the global crisis have directly affected some important macroeconomic variables and resulted in decline in the foreign exchange reserves held by RBI, fall in the external value of the rupee against US $ and decline in the stock market. Though Indian stock market has been grown as source of raising financial resource from corporate and grabs the attention of global investors and ascendency of foreign institutional/portfolio investors has been quite persistent after 1991s. Especially, emerging country like India being a prominent indicators of an economy which reflecting the economic activities in the
The stock market growth depends on economic fundamentals and its related issues and problems. The stock market is perceived as a very significant part of the financial sector of any economy. Moreover it plays a vibrant role in the utilization of capital in many of the emerging economies. Generally the stock market is affected by the many factors such as highly interaction of internal and external economy, international political, economic variables, social and investor’s sentiments and also these factors influencing each other in very intricate manner. The impact of economic fundamentals on stock market or stock returns has been a long debated issue amongst the academicians and professionals. Most of the time, stock markets don’t react to certain news at all. In India, economist, analysts and financial policy makers have been doing number of studies on this subject but not yet they have concluded. In the financial market, some analysts were concerned about a Price Bubble created in the stock markets. Normally a financial bubble rise when the market prices are not reflective of the actual reality. In India after LPG, the foreign investments like FII and FDI entered vastly and support the development of economic and financial market. However FDI and FII are affected by the global politics, international market activities, inflation, interest rate and exchange rate. Foreign investments play a vital role in developing economy by adding the saving of low and middle incomes in developing countries, in order to develop their pace of capital and investments. Foreign investments were unproductive to develop the economy of a country by exposing them to undulations of capital inflow or huge outflow of capital. The capital market plays an important role in the capital formation of the any economy. The circumstantial evidence from the financial report indicates that investors generally have faith in that monetary policy and macroeconomic variables events imply the large impact on the volatility of the stock prices. In this context, macroeconomist, financial analyst and policy makers should understand the vigorous behaviour of stock markets and especially investors prospective, the investor’s community interested in understanding the natural behaviour of the stock markets, therefore investment is guided by the volatility span. The financial markets play an important role in the economic stability and also the performance of stock market reveals the economic health of the country. The stock price is varying from time to time depending on such factors like new issues (market information) and financial results, inflation, GDP, Interest Rate, Government policy (credit policy, fiscal policy and monetary policy) and Repo rate. The performance of Indian economy shows better in spite of financial crisis health because of the support of economic policy and its balanced domestic drivers, like infrastructure projects, small and medium enterprises sectors exports and …show more content…
The effects of the global crisis have directly affected some important macroeconomic variables and resulted in decline in the foreign exchange reserves held by RBI, fall in the external value of the rupee against US $ and decline in the stock market. Though Indian stock market has been grown as source of raising financial resource from corporate and grabs the attention of global investors and ascendency of foreign institutional/portfolio investors has been quite persistent after 1991s. Especially, emerging country like India being a prominent indicators of an economy which reflecting the economic activities in the