Macroeconomic Variables and Stock Market Behaviour: An Indian Experience

Bondage between macroeconomic variables and stock market activities is a long debated, yet unsettled issue. Relying on robust econometric tools the present paper adds to this debate in trying to answer: Is there any relationship between macroeconomic indicators and stock market behaviour? Findings suggest that except Index of Industrial Production all other macroeconomiC variables have little or no impact on stock market activities in India. The findings of this study are imponant on two counts - it challenges the much acclaimed theory of market efficiency and disapproves the claim of allocative efficiency of stock market.