Relationship between Exchange Rates and Stock Market Index: Evidence from the Indian Stock Market
International Journal of Science and Research (IJSR)

International Journal of Science and Research (IJSR)
Call for Papers | Fully Refereed | Open Access | Double Blind Peer Reviewed

ISSN: 2319-7064


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Research Paper | Management | India | Volume 5 Issue 10, October 2016 | Popularity: 6.3 / 10


     

Relationship between Exchange Rates and Stock Market Index: Evidence from the Indian Stock Market

Dr. S. Poornima, M. Ganeshwari


Abstract: The debate as whether the development in the foreign exchange markets have ramifications for the stock markets have become one of the tenets in financial economics. This study tries to analyze the dynamic relationship between stock market index and exchange rate. Several statistical tests have been applied in order to study the relationship of both the series. The period for the study has been taken from 1-07-2014 to 29-07-2016 using daily closing indices. In this study, unit root test, for Exchange rate and Nifty returns, were found to be stationary at the first difference itself. Correlation between Exchange Rates and NIFTY returns were found to be negative. Further, investigation into the causal relationship between the two variables using Granger Causality test highlighted unidirectional relationship between Exchange Rates and NIFTY returns.


Keywords: Stock market, Exchange rate, Unit root test, Granger Causality test, NIFTY


Edition: Volume 5 Issue 10, October 2016


Pages: 16 - 18



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Dr. S. Poornima, M. Ganeshwari, "Relationship between Exchange Rates and Stock Market Index: Evidence from the Indian Stock Market", International Journal of Science and Research (IJSR), Volume 5 Issue 10, October 2016, pp. 16-18, https://www.ijsr.net/getabstract.php?paperid=ART20162014, DOI: https://www.doi.org/10.21275/ART20162014

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