Economics and Finance

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Photo of Harshit Agarwal

Harshit Agarwal

  • Role Title: PhD student
  • Address: Richmond Building Portland Street Portsmouth PO1 3DE
  • Telephone: tbc
  • Email:,
  • Department: Economics and Finance
  • Faculty: Portsmouth Business School


Nationality: Indian                  Research Supervisor: Dr Everton Dockery        

Economic Variables and the Stock Market Movements

Thesis summary

1991 was the year when Indian government decided to walk on the path of liberalization, globalization and privatization. Since then the stock market of India has witnessed spectacular change. From the aggregate economy's point of view importance of capital market has grown and stock market has become a key driver of modern market based Indian economy. In 1978-79 total market capitalization of Bombay stock exchange as a part of India's GDP was 4 percent it increased to 26 percent in 2002-03.

Among investors and policy makers, the linkage of macroeconomic variables with stock market has always been an area of interest. Arbitrage Pricing Theory defines the relationship between them. It states that an extensive group of macroeconomic factors affect the stock prices in the stock market and the stock markets and their indicators reflect the direction, the potential and the health of the economy. If an economy is moving at a nice pace and performing well then the stock market is frequently expected to imitate the situation and vice-versa. Many researchers in the past decades have attempted to predict the relationship between economic variables and the stock markets movement. Empirical studies have been conducted by them to predict this relationship and they have come on different conclusions.

This study would be the first of its kind. This study has included the variables, the relationship of which with stock market of India has never been analyzed but they are very much talked about in the financial circles, they influence decisions of the stock market investors, and play a significant role in the stock market movements.