Impact of Economic and Demographic Factors on Stock Market Investments in India:A Triangulated Study

This paper examines the impact of macroeconomic and demographic factors on stock market investment indicators by making use of a triangulated study of time series and cross section data. The secondary study covering a period from 1993-2010 measures the key macroeconomic indicators on stock market returns, liquidity and volumes. For the primary study a structured questionnaire was surveyed among 475 household from five largest cities of India- Mumbai, Delhi, Kolkata, Chennai and Bengaluru between the periods April 2011 to November 2011. The results of the time series study divulge that liquidity and volume of stocks traded is negatively impacted by inflation, whereas GDP growth rate positively impacts sensex returns. Primary survey findings show a negative impact of interest rates on stock market investments. Rise in domestic savings, higher household income and shift in investment pattern towards risky products from non risky instruments positively impacts stock market investments of households.