Karla Neha Factorsgold and Stock Market Impact

RIJBFA
Volume 1, Issue 4(April 2012)
ISSN: 2277 100X
A Journal of Radix International Educational and

Research Consortium
RIJBFA
RADIX INTERNATIONAL JOURNAL OF
BANKING, FINANCE AND ACCOUNTING
FACTORS CONTRIBUTING TO FLUCTUATIONS IN BSE SENSEX- AN

EMPIRICAL STUDY
Ms. Neha Kalra
Dr. Rajesh Bagga
Assistant Professor
Associate Professor and Offg. Director
Apeejay Institute of Management
Apeejay Institute of Management Jalandhar
Jalandhar
Mr. Ashish Arora
Assistant Professor
Guru Nanak Dev University College
Jalandhar
Abstract
The BSE benchmark SENSEX has moved between positive and negative terrain in a span
of few years witnessing both the massive crash of January 2008 as well as record
inflows from Foreign Institutional Investors (FIIs) trying to reallocate their funds from
risky emerging markets to stable developed markets. Apart from the global
uncertainty, there were various other interrelated factors on the domestic front that
had a significant impact on the Indian stock market. These factors include the
Journal of Radix International Educational and Research Consortium

www.rierc.org
RIJBFA
ISSN: 2277 100X
fluctuations in the Gold prices, oil prices and dollar prices, withdrawals of foreign
equity in the form of FDI and FPI and finally changes in the CRR, call money rate and
inflation rate. This study makes an attempt to examine the impact of these factors on
the Indian stock market by taking the month end prices for these variables from
secondary sources for a period starting from January 2008 to October 2011. The
research uses analytical techniques of correlation and multiple regression and for this
purpose, SPSS has been meticulously used. Empirical results show that there exists a
positive and a significant correlation of gold prices and oil prices with SENSEX and a
negative relation between dollar prices and SENSEX. The results of the regression
analysis show that Gold Prices is the variable that accounts for maximum variance in
fluctuations in SENSEX index, followed by Dollar Prices and Oil Prices. The results also
indicate that no significant correlation has been found between Inflation Rate, Foreign
Direct Investment, Call Money Rate with SENSEX.
INTRODUCTION
The Indian Stock market has been through a lot of phases in a span of few years and
the investors have had their share of surprises too. The SENSEX crash of January 2008
swept with it a large number of small scale investors while registering a record dip of
2062 points in a day. The major cause of this crash was attributed to the recession in
the global economies, especially with the US dollar losing its strength to the Indian
rupee. A large amount of equity in the form of shares was floated in the Indian
economy as an impact of Foreign Institutional Investors (FIIs) withdrawing their
money from the Indian markets. In 2009 the market was in a recovery mode, in 2010 it
consolidated. After maintaining a range of 17,500-20,500 for more than a year, the
SENSEX finally crashed. This crash was triggered by major global events, such as the

www.rierc.org
RIJBFA
ISSN: 2277 100X
S&P downgrading US debt from AAA to AA+, concern about the AAA rating status of
French debt, sovereign debt crisis spreading to bigger Euro zone economies like Italy,
Greece and Spain. Hence, several global indices, like the Dow Jones Industrial Average
(US), DAX (Germany), CAC (France), and FTSE (UK), broke their major supports.
The Bombay Stock Exchange (BSE) is known to be the oldest exchange in Asia. The
Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE a means to
measure overall performance of the exchange. The SENSEX is the benchmark for the
Indian Stock exchange, which captures the price movement. It is considered to be the
pulse of the Indian stock markets. Theoretically, the rising SENSEX is an indicator of
economic growth and is considered good for the market. However there are various
factors affecting the rise and fall of the SENSEX. Few of them are:
Gold Price: The gold rate in todays market depends entirely on the demand and
availability of the metal. Gold prices hit its all-time high of $1,895 an ounce in
September 2011. Investors were worried about both the U.S. debt crisis and the
eurozone crisis. It seemed neither the dollar nor the euro were safe investments.
When other investments look too risky, gold always looks like a good hedge. It is not
possible to state that golds value changes as a result of activity within the stock
market and it is also not possible to state that the level of the stock market changes
as a result of activity in the gold market. But the historical evidence is
overwhelming. Over the long-term, gold and stocks tend to move in opposite
directions. This has been born out in research done by the World Gold Council for
decades which shows that there is indeed a negative long-term correlation between
gold and stocks, as measured by all of the major stock indices, namely the Dow
Jones Industrial Average, the Standard & Poors 500, and the Wilshire 5000.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Whether the stocks being compared to gold are large blue chips or small, aggressive
growth companies, the correlation to gold is still negative over the long-term.
Oil Price: Oil is one of the most precious commodities on earth and is available only
in limited amounts. Crude oil is the basic form of oil from which is used to extract
other useful form of oils like petroleum, diesel, jet-fuel after refining. Companies
involved in oil production are exploration and production (E &P) companies (backend) and refining and marketing companies (front-end). In India, ONGC and Oil
India are the leading front-end players while IOC, HPCL, BPCL and Reliance are major
back-end players. There are a number of reasons leading to a rise in the oil prices
like, a weak dollar. As oil exporting nations get money in terms of dollar for their oil,
their profits decreases as dollar becomes weak. So, to protect their margins, they
increase oil cost. Also the prices of crude oil are determined by the demand and
supply gaps. Higher growth in developing countries like India and China increases
demand for oil thereby leading to a price rise. Lastly, war between an oil exporting
nation and an oil importing nation (like US and Iran).
Oil prices have significant impact on financial markets. Initially stock market rises in
tandem with oil prices as it is the economic growth which is creating more demand
for oil in the first place. Because of this increased demand, oil prices are increasing
(sometimes they increase because of just speculation which is a dangerous situation
and a warning signal). But if oil prices keep on increasing and sustain at higher
values for a longer period of times, it will have detrimental effects on the economy.
Higher the oil price increase and longer the higher prices are sustained, the bigger
the macro economic impact.
Dollar Price: When it comes to the US being a consumer, it has one of the largest
appetites in the world. To keep up its demand for consumption, its imports are huge
when compared to exports. This created pressure since there were more payments

www.rierc.org
RIJBFA
ISSN: 2277 100X
in dollars than receipt of any other currency, which made the supply of the dollar
greater for imports payment and less receipt of foreign currency from exports. This
resulted in the depreciation of the dollars value, which again caused more outflow
of dollar for import payments. This created a state of inflation and made
consumables costlier to US. To control inflation US resorted to increase in interest
rates to cool down pressure on demand side of consumption. This factor along with
recession in all other sectors, particularly real estate, is causing the mighty US dollar
to shake.
Until the 70s and 80s India aimed at to be self-reliant by concentrating more on
imports and allowing very little exports to cover import costs. However, this could
not last long because the oil price rise in the 1970s and 80s created a big gap in
Indias balance of payment. Balance of payment (BOP) of any country is the balance
resulting from the flow of payments/receipts between an individual country and all
other countries as a result of import/exports happening between an individual
country, in our case India and rest of the world. This gap widened during Iraqs
attempt to take over Kuwait. Thereafter, exports also contributed to FX reserve
along with Foreign Direct Investment into the Indian economy and reduced the BOP
gap. Indian rupee appreciation against dollar impacted the Indian economy heavily.
Foreign Direct Investment: India has emerged as the preferred destination for many
foreign international enterprises due to constructive factors such as high economic
growth, fast population growth, English speaking people, and lower costs for
workers. Indias inward investment rule went through a series of changes since
economic reforms were escorted in two decades back. Inward investments have
been constantly rising since the sharp drop witnessed in 2009, following the global
financial crisis. The FDI inflow was much better compared to last year. During the
April-September period, FDI went up by about 74 per cent to $19.13 billion from

www.rierc.org
RIJBFA
ISSN: 2277 100X
$11 billion in the year-ago period. This has been majorly because of the
liberalization of the FDI in retail, with 51% FDI in multi brand retail and 100% FDI in
single-brand retail. It is expected to bring about modern infrastructure that would
help to boost the productivity of the organised retail sector in India.
Foreign Portfolio Investment: Foreign Portfolio Investments in the form of ADRs,
GDRs, FCCB and FIIs are the manner in which foreign investors can invest in the
Indian stock market. Foreign Institutional Investors including institutions such as
Pension Funds, Mutual Funds, Investment Trusts, Asset Management or their power
of attorney holders are invited to invest in all the securities traded on the Primary
and Secondary markets, including the equity and other securities/instruments of
companies which are listed/to be listed on the stock exchanges in India including
the OTC Exchange of India. Since the opening up of Indias capital markets, the FII
activity has been on a constant rise. FII are extremely keen to invest in the BRIC
countries or Brazil, Russia, India and China. With the meltdown in the eurozone, due
to debt crisis, foreign investors have been selling having an impact on the Indian
economy and markets. Apart from this inflation, rising interest rates, corruption
issue, pending bills, rollback in FDI in Retail has given excuse to press sell button to
FII in India.
Cash Reserve Ratio: CRR is the rate of the money the banks used to keep with the
RBI for security without any interest. The increase in interest rate will directly
impact the housing, experts, banks, automobile sell figure etc. in the short term.
Since market is more sensitive towards the short term reactions it leads to the fall in
the above sectors. The real jerk is felt in the monthly sell figure and turnover of the
above mentioned sectors. Continuous increase in the CRR impacts the quarterly
profitability of the above sectors. Further, if it is inline with the increase in the
interest rate in the cash deposits then it will directly impact the stock market since

www.rierc.org
RIJBFA
ISSN: 2277 100X
the big money will flow out from the high risk sector to the low risk sector resulting
low participation in the market. The Reserve Bank of India has been cutting cash
reserve requirements, indicating a policy shift towards reviving growth after nearly
two years of fighting inflation.
Inflation: Recent volatility of domestic staple prices appear higher than that
prevailing before the 2008 global food price crisis. Average food price volatility for a
sample of 26 low income countries has been higher over the past year than it was in
2006/07. Price volatility creates additional risks and is a particular burden for low
income producers who are least able to hedge against these fluctuations, as well as
for poor consumers. Increased volatility tends to lead to greater government
intervention in agricultural markets often with sizeable fiscal costs. In developing
country context, inflation tolerance in India is fairly low. And within the overall
inflation, food price inflation is least tolerated as bulk of the population spend
majority of their income on food items. During the last decade, food price inflation
exceeded the headline inflation measured by wholesale price index since around
the end of 2005, barring the period September 2007 to September 2008. This gap
has become all the more glaring in the more recent time. Currently, this continuing
rise in food price inflation has become a major cause for concern for policy makers
in India.
Call Money Rate: Call money market is the most sensitive part of money market, in
which a good number of players from banking sector as well as the non-bank
financial sector actively participate on a regular basis. The head offices, after
meeting their usual liquidity requirement, invest the surplus funds in the call money
market. The NCBs are the main source of fund in the call money market. The cost of
funds for FCBs is very low as compared to the local banks but they prefer to
preserve the excess reserve rather than lend in the interbank money market mainly

www.rierc.org
RIJBFA
ISSN: 2277 100X
because of lack of confidence. The NBFIs are now participating in the inter-bank
money market in both borrowing and lending but they borrow more than lending.
Therefore, they play an important role in the interbank money market.
Foreign Exchange Reserves: Foreign exchange reserves include foreign exchange
and gold, Special Drawing Rights and International Monetary Fund reserve positions
held by central banks and monetary authorities. India's accumulation of foreign
exchange reserves has been increasing in recent years. The country's primary
sources of foreign exchange reserves have been capital flows and portfolio inflows.
High foreign exchange reserves are often seen as a strength indicating the backing a
currency has. On the other side of the coin, however, holding of huge foreign
exchange reserves also indicates the lack of confidence on the global financial
architecture.
The advent of floating exchange rate in 1973, reforms of financial markets in the
early 1990s and the Asian currency crisis of 1997-98 have jointly made a strong pitch
for the dynamic linkage between stock and foreign exchange market. Both the
markets are considered as the most sensitive segment of the financial markets
because the impact of any such deviation is associated with policy variables as well
as macroeconomic variables. However, in the case of foreign exchange market, the
impact is direct whereas in the case of stock market there is an indirect impact.
REVIEW OF LITERATURE
In the past decades, many researchers attempted to predict various determinants of
stock markets but due to shortage of time & inability to cover all the past studies,
some of the studies have been considered in this section that has provided a base for
this research.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Yucel and Kurt (2002) examined the foreign exchange exposure of Turkish companies
in the study for a sample of 152 companies listed in stanbul Stock Exchange. The
findings revealed that 11.8 % of sample firms had a positive and significant economic
exposure for the examined period. The proportion and mean exposure coefficient
were high for exporter companies compare to non-exporter and oveall sample. The
results from the inclusion of market return to the model do not reveal significant
difference in the economic exposure of the companies. Akhtaruzzaman, Akhter and
Masuduzzaman (2005) investigated the call money market in Bangladesh and the
results revealed that in most cases, whenever excess reserve fell, the rate of interest in
call money market rose and vice versa. Liao and Chen (2005) examined the
relationship among oil prices, gold prices, and individual Industrial Sub-Indices instead
of the popular Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX).
The authors believed that commodity prices should have different degrees of
influences to individual industries instead of the whole market. According to previous
researches, stock returns have leptokurtic, volatility clustering, and volatility
asymmetric characteristics; this research further applied the TGARCH models to
described the relationship among oil prices, gold prices, and individual Industrial SubIndices. It was concluded that the fluctuations in oil prices influenced both the
Electronic Industrial Sub-Indices and the Rubber Industrial Sub-Indices. The
correlations among oil prices and the Electronic Industrial Sub-Indices and the Rubber
Industrial Sub-Indices were positive. Further, the Chemical Industrial Sub-Indices,
Cement Industrial Sub-Indices, Automobile Industrial Sub-Indices, Food Industrial SubIndices, and Textiles Industrial Sub-Indices were influenced by fluctuations in gold
prices.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Gnsel and ukur (2007) investigated the performance of the Arbitrage Pricing Theory
(APT) in London Stock Exchange for the period of 1980-1993 as monthly. The
researcher developed seven prespecified macroeconomic variables. The term
structure of interest rate, the risk premium, the exchange rate, the money supply and
unanticipated inflation were similar to those derived in Chen, Roll and Ross
(1986).Using OLS technique, the study has demonstrated that there were some big
differences among industries. Before interpreting the OLS results, the serial correlation
problem was discussed by using Durbin Waltson Statistics. D-W statistics showed that
there was no evidence for positive or negative serial correlation. Subair and Salihu
(2007) also investigated the effects of exchange rate volatility on the Nigeria stock
markets. It was found that the exchange rate volatility generated via GARCH process
exerted a stronger negative impact on the Nigeria stock markets. However the rate of
inflation and interest rate did not have long run relationship with stock market
capitalization since the major participant in the market is government. Based on this it
was recommended that a coordinated monetary and fiscal policy should be put in
place to check mate the fluctuation of exchange rate in order to deepen the depth of
the Stock Market.
Ahmed (2008) investigated the nature of the causal relationships between stock prices
and the key macro economic variables representing real and financial sector of the
Indian economy for the period March, 1995 to March, 2007 using quarterly data.
These variables are the index of industrial production, exports, foreign direct
investment, money supply, exchange rate, interest rate, NSE Nifty and BSE SENSEX in
India. The study indicated that stock prices in India lead economic activity except
movement in interest rate. Interest rate seemed to lead the stock prices. The study
indicated that Indian stock market seemed to be driven not only by actual

www.rierc.org
RIJBFA
ISSN: 2277 100X
performance but also by expected potential performances. The study revealed that
the movement of stock prices is not only the outcome of behaviour of key macro
economic variables but it is also one of the causes of movement in other macro
dimension in the economy.
Gogineni (2008) explored the reaction of the US stock market as a whole and of
different industries to daily oil price changes. It was found that the direction and
magnitude of the markets reaction to oil price changes depended on the magnitude
of the price changes. Oil price changes most likely caused by supply shocks had a
negative impact while oil price changes most likely caused by shifts in aggregate
demand had a positive impact on the same day market returns. Nair (2008) has
examined the macroeconomic determinants of stock market development in India
over 1993-94 to 2006-07empirically. Cointegration and error correction modelling was
used for the analysis. The results showed that there is long run relationship between
all the macroeconomic variables used and stock market development. The variables
exchange rate, inflation and Foreign Institutional Investment (FII) were found to have
no significant influence on stock market development in India.
Adam and Tweneboah (2009) used multivariate cointegration and error correction
model, to examine the impact of Foreign Direct Investment (FDI) on the stock market
development in Ghana. The results indicated that there existed a long-run relationship
between FDI, nominal exchange rate and stock market development in Ghana. It was
found that a shock to FDI significantly influenced the development of stock market in
Ghana. Further, Mohammad,Hussain, Jalil and Ali (2009) explored the correlation
among the macroeconomics variables and share prices of KSE (Karachi Stock Exchange)
in context of Pakistan. The study considered several quarterly data for different

www.rierc.org
RIJBFA
ISSN: 2277 100X
macroeconomics variables are as foreign exchange reserve, foreign exchange rate,

industrial production index (IPI), whole sale price index (WPI), gross fixed capital
formation (GFCF) and broad money M2. The result showed that after the reforms in
1991 the influence of foreign exchange rate and foreign exchange reserve significantly
affected the stock prices, while other variables like IPI and GFCF are insignificantly
affect stock prices.
Hye, Wasti, Khatoon and Imran (2009) used the robust time series tools in order to
estimate Pakistans money demand function for the period 1971:1-2006:4. It was
found that there were four cointegrating vectors in money demand, interest rate,
economic activity, inflation, stock prices and exchange rate. The results revealed that
stock price had positively and statistically significant wealth effect and exchange rate
insignificantly effected the money demand in the long run. But in the short run the
inflation had a negative and significant effect on money demand. Aliyu (2010) applied
the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model to
assess the impact of inflation on stock market returns and volatility using monthly time
series data from the two West African countries, that is, Nigeria and Ghana. In
addition, the impact of asymmetric shocks was investigated using the QGARCH model
developed by Sentana (1995), in both countries. Results for Nigeria showed weak
support for the hypothesis that bad news exerted more adverse effect on stock market
volatility than good news of the same magnitude, while a strong opposite case holds
for Ghana. Furthermore, inflation rate and its three month average were found to
have significant effect on stock market volatility in the two countries.
Wang and Huang (2010) analysed the daily data and employed time series method to
explore the impacts of fluctuations in crude oil price, gold price, and exchange rates of

www.rierc.org
RIJBFA
ISSN: 2277 100X
the US dollar vs. Various currencies on the stock price indices of the United States,
Germany, Japan, Taiwan, and China respectively, as well as the long and short-term
correlations among these variables. The empirical results showed that there exist cointegrations among fluctuations in oil price, gold price and exchange rates of the dollar
vs. various currencies, and the stock markets in Germany, Japan, Taiwan and China.
This indicated that there existed long-term stable relationships among these variables.
Whereas there was no co-integration relationship among these variables and the U.S.
stock market indices. Ghosh, Roy, Bandyopadhyay and Choudhuri (2010) examined the
primary factors responsible for affecting Bombay Stock Exchange (BSE) in India. The
paper investigated the relative influence of the factors affecting BSE and thereby
categorizing them. With the help of multiple regression model and applying Factor
analysis the primary factors were traced out. The relationship between BSE SENSEX
and some other important economical factors like, Oil prices, Gold price, Cash Reserve
Ratio, Food price inflation, Dollar price, Foreign Capital Inflows has been estimated
taking into consideration the Multicollinearity problem among different independent
variables and attempted to eliminate it. The results revealed that dollar price along
with Factor 1i.e; External Reserve and Factor score 2i.e; Inflation inertia are
significantly affecting BSE SENSEX. The fluctuations in SENSEX due to Oil and CRR are
significant. Any rise in Oil price will create inflation inertia which will generate
stochasticity in SENSEX. The External reserves taken together will act as resource
generating Factor in attracting Foreign Capital inflows, which will make SENSEX more
sensitive. Gupta (2011) examined the relationship between Indian stock market and
FIIs investment in India and found that both, Indian stock market and FIIs influenced
each other; however, their timing of influence was different. Ray (2012) assessed the
relationship between foreign exchange reserves of India and BSE market capitalization
on the basis of annual data from the year 1990-91 to2010-11. This study uses simple

www.rierc.org
RIJBFA
ISSN: 2277 100X
linear regression model, unit root test, granger causality test to measure the
relationship between foreign exchange reserves of India and BSE market capitalization.
The results depicts that foreign exchange reserves of India has positive impact on BSE
Stock Market capitalization.
The Perusal of literature revealed that many studies have been conducted in the past
focusing on one or two of the factors determining stock market all over the world. The
present study investigates into the fluctuation in the Indian stock market in the past
four years and analyses the factors which directly or indirectly affect the Indian Stock
Market. The study of factors affecting their investment enables investor in taking
decision regarding their investment.
OBJECTIVES OF THE STUDY
The current study has been carried out to achieve the following objectives:
Identify the various factors affecting the Indian Stock Market (SENSEX).
Investigate into the relationship between the various factors and SENSEX.
Identify variables having significant impact on SENSEX.
HYPOTHESES FORMULATION
In line with these objectives, certain hypotheses were formulated which are as follows:
Wang and Huang (2010) opined that there exist co-integrations among fluctuations in
oil price, gold price and exchange rates of the dollar vs. various currencies, and the

www.rierc.org
RIJBFA
ISSN: 2277 100X
stock markets in Germany, Japan, Taiwan and China but no co-integration relationship
was established with the U.S. stock market indices. Liao and Chen (2005) also
examined the relationship among oil prices, gold prices, and individual Industrial SubIndices instead of the popular Taiwan Stock Exchange Capitalization Weighted Stock
Index (TAIEX).The results revealed that correlations among oil prices and the Electronic
Industrial Sub-Indices and the Rubber Industrial Sub-Indices were positive. Based on
these results the following hypothesis was framed:
H01: There is no significant impact of Gold Prices on the SENSEX.
Gogineni (2008) explored the reaction of the US stock market as a whole and of
different industries to daily oil price changes. It was found that oil price changes most
likely caused by supply shocks had a negative impact while oil price changes most
likely caused by shifts in aggregate demand had a positive impact on the same day
market returns. Based on these results the following hypothesis was framed:
H02: There is no significant impact of Oil Prices on the SENSEX.

Yucel and Kurt (2002) examined the foreign exchange exposure of Turkish companies
in the study for a sample of 152 companies listed in stanbul Stock Exchange. The
findings revealed a positive and significant economic exposure for the examined
period but the results from the inclusion of market return to the model do not reveal
significant difference in the economic exposure of the companies. Based on these
results the following hypothesis was framed:

www.rierc.org
RIJBFA
ISSN: 2277 100X
H03: There is no significant impact of Dollar Prices on the SENSEX.
Gnsel and ukur (2007) investigated the performance of London Stock Exchange to
examine the impact of interest rate, the risk premium, the exchange rate, the money
supply and unanticipated inflation. Durbin Waltson Statistics showed that there was
no evidence for positive or negative serial correlation. Aliyu (2010) also assessed the
impact of inflation on stock market returns and volatility The results showed weak
support for the hypothesis that bad news exerted more adverse effect on stock market
volatility than good news of the same magnitude, while a strong opposite case holds
for Ghana. Furthermore, inflation rate and its three month average were found to
have significant effect on stock market volatility. Based on these results the following
hypothesis was framed:
H04: There is no significant impact of Inflation Rate on the SENSEX.
Ray (2012) assessed the relationship between foreign exchange reserves of India and
BSE market capitalization on the basis of annual data from the year 1990-91 to201011. The results depicts that foreign exchange reserves of India has positive impact on
BSE Stock Market capitalization. Mohammad, Hussain, Jalil and Ali (2009) explored the
correlation among the macroeconomics variables like foreign exchange reserve,
foreign exchange rate, industrial production index (IPI), whole sale price index (WPI),
gross fixed capital formation (GFCF) and broad money (M2) and share prices of KSE
(Karachi Stock Exchange) in context of Pakistan. The result showed that after the
reforms in 1991 the influence of foreign exchange rate and foreign exchange reserve
significantly affected the stock prices, while other variables like IPI and GFCF are

www.rierc.org
RIJBFA
ISSN: 2277 100X
insignificantly affect stock prices. Based on these results the following hypothesis was
framed:
H05: There is no significant impact of holding of Foreign Exchange Reserves on the

SENSEX.
Ahmed (2008) investigated the nature of the causal relationships between stock prices
and the key macro economic variables like industrial production, exports, foreign
direct investment, money supply, exchange rate, interest rate, NSE Nifty and BSE
SENSEX in India. The study indicated that stock prices in India lead economic activity
except movement in interest rate. Interest rate seemed to lead the stock prices. The
study revealed that the movement of stock prices is not only the outcome of
behaviour of key macro economic variables but it is also one of the causes of
movement in other macro dimension in the economy. Adam and Tweneboah (2009)
also examined the impact of Foreign Direct Investment (FDI) on the stock market
development in Ghana. The results indicated that there existed a long-run relationship
between FDI, nominal exchange rate and stock market development in Ghana. It was
found that a shock to FDI significantly influenced the development of stock market in
Ghana. Based on these results the following hypothesis was framed:
H06: There is no significant impact of FDI on the Indian Stock Market SENSEX.
Gupta (2011) examined the relationship between Indian stock market and FIIs
investment in India and found that both, Indian stock market and FIIs influenced each
other; however, their timing of influence was different. Nair (2008) also examined the
macroeconomic determinants of stock market development in India over 1993-94 to

www.rierc.org
RIJBFA
ISSN: 2277 100X
2006-07empirically. The variables exchange rate, inflation and Foreign Institutional

Investment (FII) were found to have no significant influence on stock market
development in India. Based on these results the following hypothesis was framed:
H07: There is no significant impact of FPI on the SENSEX.

Akhtaruzzaman, Akhter and Masuduzzaman (2005) investigated the call money market
in Bangladesh and the results revealed that in most cases, whenever excess reserve
fell, the rate of interest in call money market rose and vice versa. Based on these
results the following hypothesis was framed:
H08: There is no significant impact of fluctuations in call money rate on the SENSEX.
DATA BASE AND METHODOLOGY

The current study is a descriptive research, as it involves a description of the state of
affairs as it exists at present. The data for the variables used in the research has been
collected from secondary sources for a period starting from January 2008 to October
2011. Month end prices have been collected for all the variables from
www.bseindia.com and www.rbi.com.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Table 1- Description of dependent and independent variables

Variable Name
Study period and
Data Source
Frequency
INDEPENDENT VARIABLES
Gold Prices
Jan 2008 Oct 2010
World Gold Council
Month end prices

Oil Prices
Dollar Prices
Jan 2008 Oct 2010
New York Stock
Month end prices
Exchange
Jan 2008 Oct 2010
Reserve Bank of India
Month end prices

Cash Reserve Ratio(CRR)
Jan 2008 Oct 2010
Month end prices

Inflation
Jan 2008 Oct 2010
Month end prices

Call Money Rate
Jan 2008 Oct 2010
Month end prices

Foreign Direct
Jan 2008 Oct 2010
Investment(FDI)
Month end prices
Foreign Portfolio
Jan 2008 Oct 2010
Investment(FPI)
Month end prices
Foreign Exchange
Jan 2008 Oct 2010
Reserves(Forex)
Month end prices
DEPENDENT VARIABLE
SENSEX
Jan 2008 Oct 2010
BSE India
Month end prices

www.rierc.org
RIJBFA
ISSN: 2277 100X
STATISTICAL TOOLS AND TECHNIQUES OF ANALYSIS

In order to analyse the data, Correlation and Multiple Regression approach have been
used. For this purpose, SPSS has been meticulously used. Here SENSEX has been taken
as the dependent or the criterion variable and Gold Prices, Oil Prices, Dollar Prices,
CRR, Inflation Rate, Call Money Rate, FDI, FPI and Forex have been taken as the
independent or the predictor variables.
CORRELATION ANALYSIS
The Bivariate Correlations procedure computes the pairwise associations for a set of
variables and displays the results in a matrix. It is useful for determining the strength
and direction of the association between two scale or ordinal variables. Under this
Pearson correlation coefficients have been computed which measure the degree of
linear association between two variables.

www.rierc.org
RIJBFA
ISSN: 2277 100X

www.rierc.org
RIJBFA
ISSN: 2277 100X
RESULTS
Table 2 shows the Pearson correlation coefficients of SENSEX with other variables.
According to Pearsons correlation the correlation coefficient of gold price and SENSEX
is 0.532 and oil price and SENSEX is 0.492 at 0.01 level of significance. Further the
correlation coefficients of dollar price and SENSEX is -0.298 at 0.05 level of
significance. The Pearson correlation of SENSEX with other variables FDI, FPI, CRR, Call
Money Rates, Inflation and Forex are insignificant.
The correlation table shows correlation coefficients ranging in value from 1 (a perfect
negative relationship) and +1 (a perfect positive relationship). A value of 0 indicates no
linear relationship. Correlation coefficients significant at the 0.05 level are identified
with a single asterisk, and those significant at the 0.01 level are identified with two
asterisks. It has been found that Gold price and Oil price have a significant and fairly
strong positive correlation with SENSEX, i.e., a rise in the gold or oil prices results in
corresponding rise in SENSEX. The results also show that there exists a negative
correlation between dollar price and SENSEX, i.e., a rise in the dollar prices results in a
corresponding fall in SENSEX. Further, except these three variables, all other variables
are less correlated to SENSEX.
The table also shows that independent variables are highly correlated to each other
like Gold Prices are positively correlated with Dollar at 0.05 and Forex at 0.01 level of
significance. Similarly, Oil Prices are positively correlated with CRR and Call Money
Rate and with Forex at 0.01 level of significance. This indicates that they are not
independent of each other and only one or two cannot be used to predict the
dependent variables i.e., SENSEX. So further regression is used which is useful in

www.rierc.org
RIJBFA
ISSN: 2277 100X
eliminating some of the independent variables. Some of them being correlated with
other variables do not add any value to regression model.
REGRESSION ANALYSIS
Multiple Regression Analysis is a statistical technique which analyses the linear
relationship between a dependent variable and multiple independent variables by
estimating coefficients for the equation for a straight line. The linear regression model
assumes that there is a linear, or "straight line," relationship between the dependent
variable and each predictor variable.
RESULTS
SENSEX AS THE DEPENDENT VARIABLE
In order to find out the contribution of variables on the performance of the stock
market, Stepwise regression was run where SENSEX was taken as dependent variable.
Stepwise regression analysis is procedure in which the predictor variables enter or are
removed from the regression equation one at a time. The purpose of this procedure is
to select from a large number of predictor variables a subset of variables that account
for most of the variation in the dependent or the criterion variable. The table present
the results of Stepwise regression analysis.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Table 3- Variables Entered/Removeda

Model
Variables Entered Variable
Method
s
Remove
d
1
GoldPrices
Stepwise (Criteria: Probability-of-F-to-enter <= .050,

Probability-of-F-to-remove >= .100).
DollarPrices

OilPrices

CRR

Forex

FPI

a. Dependent Variable: SENSEX
Table 3 shows that six variables being Gold Prices, Dollar Prices, Oil Prices, CRR, Forex
and Foreign Portfolio Investment (FPI) are entered. Here, Gold Prices being the
entering variable in first model of stepwise regression at p-level of 0.05 percent, very
close to significance at 95% confidence level and other variables being Dollar Prices,
Oil Prices, CRR, Forex and Foreign Portfolio Investment (FPI) entering respectively in

www.rierc.org
RIJBFA
ISSN: 2277 100X
the second, third, fouth, fifth and sixth model at p-level of 0.05 percent, very close to
significance at 95% confidence level. The following tables sum up the results of
regression analysis.
Table 4 Model Summary

Model
R Square
Adjusted R
Std. Error of the
Square
Estimate
.532a
.283
.267
.85636
.722b
.522
.499
.70761
.762c
.581
.551
.67025
.849d
.721
.694
.55287
.882e
.778
.750
.49955
.896f
.803
.773
.47648
a. Predictors: (Constant), GoldPrices

b. Predictors: (Constant), GoldPrices, DollarPrices
c. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices
d. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR
e. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR, Forex
f. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR, Forex,
FPI
Table 4 presents the regression results when SENSEX is taken as the dependent
variable and other variables as predictors and the first stepwise regression is run. It
can be seen that in model 1, Gold Prices is the first variable to enter the equation and
accounts for 28 percent variance in SENSEX as shown by R2. This is increased to 52

www.rierc.org
RIJBFA
ISSN: 2277 100X
percent when Dollar Prices enter the equation in model 2 and increased to 58 percent,
72 percent, 77 percent and lastly 80 percent when Oil Prices, CRR, Forex and Foreign
Portfolio Investment enter the equation in further models. Adjusted R2 for model 1 is
.0.267 and model 2 is 0.499.
Table 5- ANOVAg
Model
Sum of
df
Squares
1
Regressio
Mean
Sig.
17.357
.000a
23.432
.000b
19.387
.000c
26.552
.000d
28.061
.000e
Square
12.729
12.729
Residual
32.267
44
.733
Total
44.996
45
Regressio
23.466
11.733
Residual
21.531
43
.501
Total
44.996
45
Regressio
26.128
8.709
Residual
18.868
42
.449
Total
44.996
45
Regressio
32.464
8.116
Residual
12.532
41
.306
Total
44.996
45
Regressio
35.014
7.003

www.rierc.org
RIJBFA
ISSN: 2277 100X
Residual
9.982
40
.250
Total
44.996
45
Regressio
36.142
6.024
Residual
8.854
39
.227
Total
44.996
45
26.532
.000f
a. Predictors: (Constant), GoldPrices

b. Predictors: (Constant), GoldPrices, DollarPrices
c. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices
d. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR
e. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR, Forex
f. Predictors: (Constant), GoldPrices, DollarPrices, OilPrices, CRR, Forex,
FPI
g. Dependent Variable: SENSEX
The Anova table gives an F- test value to determine whether the model is a good fit for
the data. It gives F-test values, one for each model of the procedure. For the initial
model 1, F-ratio is 17.35 and is highly significant at less than 1% level of significance.
Further all the models had F-ratio significant at less than 1% level of significance.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Table 6- Coefficientsa
Model
Unstandardized
Standardize
Coefficients
Sig.
.000
.999
4.166
.000
.435
.666
Coefficients
B
Std.
Beta
Error
1
(Constant)
.000
.126
GoldPrices
.532
.128
(Constant)
.046
.105
GoldPrices
.692
.111
.693
6.236
.000
DollarPrices
-.508
.110
-.514
-4.631
.000
(Constant)
.036
.099
.361
.720
GoldPrices
.617
.110
.617
5.634
.000
DollarPrices
-.401
.113
-.405
-3.547
.001
OilPrices
.267
.110
.267
2.435
.019
(Constant)
.142
.085
1.665
.103
GoldPrices
.396
.103
.396
3.860
.000
DollarPrices
-.697
.114
-.705
-6.132
.000
OilPrices
.716
.134
.716
5.349
.000
CRR
-.665
.146
-.760
-4.553
.000
(Constant)
.117
.077
1.509
.139
GoldPrices
.520
.100
.520
5.173
.000
DollarPrices
-.574
.110
-.581
-5.234
.000
OilPrices
.778
.123
.778
6.352
.000
CRR
-.547
.137
-.625
-3.993
.000
.532

www.rierc.org
RIJBFA
Forex
-.307
.096
(Constant)
.111
.074
GoldPrices
.519
.096
DollarPrices
-.564
OilPrices
ISSN: 2277 100X

-.307
-3.197
.003
1.508
.140
.519
5.415
.000
.105
-.570
-5.387
.000
.759
.117
.759
6.482
.000
CRR
-.510
.132
-.583
-3.869
.000
Forex
-.285
.092
-.285
-3.090
.004
FPI
.162
.073
.162
2.229
.032
a. Dependent Variable: SENSEX
Table 6 displays the coefficients, where the unstandardized beta coefficients show
how strongly the independent variable is associated with the dependent variable. And
when we add the standard error to it, we get standardized beta coefficients which
provide us with more comparable results. Further a large value indicates that a unit
change in this predictor variable has a large effect on the criterion variable. The t and
Sig (p) values give a rough indication of the impact of each predictor variable a big
absolute t value and small p value suggests that a predictor variable is having a large
impact on the criterion variable. Here the t-values for Gold Prices, Dollar Prices and
CRR are significant at less than 1% level of significance and oil prices, Forex and FPI are
significant at less than 5% level of significance.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Table 7- Excluded Variablesg

Model
Beta In
Sig.
Partial
Collinearit
Correlation
y Statistics
Tolerance
OilPrices
.420a
3.686
.001
.490
.976
DollarPrices
-.514a
-4.631
.000
-.577
.902
CRR
.268a
2.056
.046
.299
.895
Inflation
-.003a
-.026
.979
-.004
.981
CallMoneyRate
-.072a
-.557
.580
-.085
1.000
FDI
.135a
1.049
.300
.158
.984
FPI
.193a
1.537
.132
.228
.999
Forex
-.223a
-1.617
.113
-.239
.825
OilPrices
.267b
2.435
.019
.352
.827
CRR
-.103b
-.707
.484
-.108
.532
Inflation
.154b
1.398
.170
.211
.897
CallMoneyRate
-.173b
-1.641
.108
-.245
.962
FDI
.000b
.002
.998
.000
.911
FPI
.218b
2.144
.038
.314
.997
Forex
-.199b
-1.750
.087
-.261
.824
CRR
-.760c
-4.553
.000
-.579
.244
Inflation
.234c
2.247
.030
.331
.840
CallMoneyRate
-.313c
-3.120
.003
-.438
.823
FDI
-.034c
-.318
.752
-.050
.895
FPI
.242c
2.568
.014
.372
.988

www.rierc.org
RIJBFA
ISSN: 2277 100X
Forex
-.410c
-3.796
.000
-.510
.648
Inflation
.128d
1.374
.177
.212
.771
CallMoneyRate
-.049d
-.386
.702
-.061
.426
FDI
-.106d
-1.207
.234
-.188
.868
FPI
.187d
2.341
.024
.347
.963
Forex
-.307d
-3.197
.003
-.451
.601
Inflation
.064e
.725
.473
.115
.723
CallMoneyRate
-.050e
-.435
.666
-.070
.426
FDI
-.046e
-.557
.581
-.089
.815
FPI
.162e
2.229
.032
.336
.951
Inflation
.045f
.534
.596
.086
.716
CallMoneyRate
-.030f
-.269
.789
-.044
.423
FDI
-.021f
-.258
.798
-.042
.797
a. Predictors in the Model: (Constant), GoldPrices

b. Predictors in the Model: (Constant), GoldPrices, DollarPrices
c. Predictors in the Model: (Constant), GoldPrices, DollarPrices, OilPrices
d. Predictors in the Model: (Constant), GoldPrices, DollarPrices, OilPrices, CRR
e. Predictors in the Model: (Constant), GoldPrices, DollarPrices, OilPrices, CRR,
Forex
f. Predictors in the Model: (Constant), GoldPrices, DollarPrices, OilPrices, CRR,
Forex, FPI
g. Dependent Variable: SENSEX
Table 7 produces the list of variables that have been excluded. In model 1, Dollar
Prices, Oil Prices, CRR, Call Money Rate, Inflation Rate, FDI, FPI and Forex have been

www.rierc.org
RIJBFA
ISSN: 2277 100X
excluded. And in model 2, Oil Prices, CRR, Call Money Rate, Inflation Rate, FDI, FPI and
Forex have been excluded.
The study makes an attempt to find out the relationship between BSE SENSEX and
some other important economical factors in which some significant relationships have
been established. The research used statistical methods to analyse monthly basis
database of different economical variables. Finally some significant relationships of
those variables with BSE SENSEX have been identified. The correlation matrix shows a
positive and a significant positive relationship between gold prices and oil prices and a
negative relation between dollar prices and SENSEX, thus rejecting the null hypotheses
(H01, H02 and H03). When SENSEX is taken as the dependent variable and other variables
as predictors and the first stepwise regression is run, it was seen that Gold Prices is the
variable that accounts for 28 percent variance in SENSEX. Followed by Gold Prices are
the Dollar Prices, both of which combined account for a variance of 52 percent. It has
also been found that CRR, Forex and FPI have also been contributing to fluctuations in
the SENSEX, thus rejecting the null hypotheses (H05 and H07).
Further, there has no
significant impact of Inflation Rate, Foreign Direct Investment and Call Money Rate on
SENSEX, resulting in acceptance of the null hypotheses (H04, H06 and H08).
CONCLUSION
The Indian Stock market has been through a lot of phases in a span of few due to
various reasons like the SENSEX crash of January 2008 which was attributed to the
recession in the global economies. In 2009 the market was in a recovery mode, but in
2010 it consolidated its position. Yet again the SENSEX crashed. This crash was

www.rierc.org
RIJBFA
ISSN: 2277 100X
triggered by major global events, such as the S&P downgrading US debt from AAA to
AA+, concern about the AAA rating status of French debt, sovereign debt crisis
spreading to bigger Euro zone economies like Italy, Greece and Spain. Hence, several
global indices, like the Dow Jones Industrial Average (US), DAX (Germany), CAC
(France), and FTSE (UK), broke their major supports. Apart from the global uncertainty,
there were various other interrelated factors on the domestic front that had a
significant impact on the Indian stock market. These factors include the fluctuations in
the Gold prices, oil prices and dollar prices, withdrawals of foreign equity in the form
of FDI and FPI and finally changes in the CRR, call money rate and inflation. In this
study an attempt has been made to analyse the impact of these factors on the Indian
stock market by taking the month end prices for these variables from secondary
sources for a period starting from January 2008 to October 2011. In order to analyse
the data, Correlation and Multiple Regression approach have been used. For this
purpose, SPSS has been meticulously used.
The results reveal some significant relationships of these variables with BSE SENSEX.
The correlation matrix shows a positive and a significant relationship of gold prices and
oil prices with SENSEX, and a negative relation between dollar prices and SENSEX. The
results of the regression analysis reveal that Gold Prices is the variable that accounts
for 28 percent variance in SENSEX. Followed by Gold Prices are the Dollar Prices, both
of which combined account for a variance of 52 percent. It has also been found that
CRR, Forex and FPI have also been contributing to fluctuations in the SENSEX. Lastly,
no significant correlation has been found between Inflation Rate, Foreign Direct
Investment, Call Money Rate and SENSEX. Moreover, these three variables have
accounted for the least variance in SENSEX. Several other factors like Government
Policies, political turbulence and social variables affects fluctuations in BSE SENSEX

www.rierc.org
RIJBFA
ISSN: 2277 100X
which can be analyzed statistically in future studies. Due to the constraint on data base
the impact of political factors and turbulence on BSE SENSEX have not been
considered.
REFERENCES
Adam A. and Tweneboah G. (2009). Foreign Direct Investment and Stock Market
Development: Ghanas Evidence. International Research Journal of Finance and
Economics, (1), 178-185.
Ahmed S. (2008). Aggregate Economic Variables and Stock Markets in India.

International Research Journal of Finance and Economics, (1), 141-164.
Akhtaruzzaman M., Akhter M., and Masuduzzaman M. (2005). Recent Fluctuations in

Call Money Rate: Causes and its impact. Bank Parikrama, XXX(1), 43-68.
Aliyu S. (2010). Does inflation has an impact on Stock Returns and Volatility? Evidence
from Nigeria and Ghana, available at http://www.csae.ox.ac.uk/conferences/2011EDiA/papers/054-Aliyu.pdf
Ghosh A., Roy S., Bandyopadhyay G. And Choudhuri K. (2010). Determinants Of BSE
SENSEX: A Factor Analysis Approach. Paper presented at the International Conference
of Business and Applied Sciences Academy at Bloomsburg University, Bloomsburg,
Pennsylvania, USA.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Gogineni S. (2008). The Stock Market Reaction to Oil Price Changes, available at
http://69.175.2.130/~finman/Prague/Papers/TheStockMarketReactiontoOilPriceChang
es.pdf
Gunsel N. And ukur S. (2007). The Effects of Macroeconomic Factors on the London
Stock Returns: A Sectoral Approach. International Research Journal of Finance and
Economics, (10), 140-152.
Gupta A. (2011). Does The Stock Market Rise Or Fall Due To Fiis In India?, International
Refereed Research Journal, II(2), 99-107.
Hye Q. Wasti S. Khatoon N. and Imran K. (2009.) Relationship between Stock Prices,
Exchange Rate and Demand for Money in Pakistan. Middle Eastern Finance and
Economics, (3),89-96.
Liao S. And Chen J. (2005). The Relationship Among Oil Prices, Gold Prices And The
Individual
Industrial
Sub-Indices
In
Taiwan,
available
at
http://ema.net23.net/ecmr/data/Contents/Shih-Jen/COMPLETE_PAPER.pdf.
Mohammad S. Hussain A. Jalil M. And Ali A. (2009). Impact of Macroeconomics

Variables on Stock Prices: Emperical Evidance in Case of Kse (Karachi Stock
Exchange),38(1), 96-103.
Ray S. (2012). Foreign Exchange Reserve and its Impact on Stock Market Capitalization:
Evidence from India. Research on Humanities and Social Sciences, 2( 2), 46-60.

www.rierc.org
RIJBFA
ISSN: 2277 100X
Subair K. And Salihu O. (2007). Exchange Rate Volatility and the Stock Market: The
Nigerian
Experience,
available
at
http://www.techrepublic.com/whitepapers/exchange-rate-volatility-and-the-stockmarket-the-nigerian-experience/2390781
Wang M., Wang C. And Huang T. (2010). Relationships among Oil Price, Gold Price,
Exchange Rate and International Stock Markets. International Research Journal of
Finance and Economics. (47), 82-91.
Ycel T. And Kurt G. (2002). Foreign Exchange Rate Sensitivity And Stock Price:
Estimating
Economic
Exposure
Of
Turkish
Companies,
available
http://www.oppapers.com/essays/Foreign-Exchange-Rate-Sensitivity-StockPrice/128337

www.rierc.org
at

Karla Neha Factorsgold and Stock Market Impact

Cargado por

Información del documento

Título original

Derechos de autor

Formatos disponibles

Compartir este documento

Compartir o incrustar documentos

Opciones para compartir

¿Le pareció útil este documento?

¿Este contenido es inapropiado?

Copyright:

Formatos disponibles

Karla Neha Factorsgold and Stock Market Impact

Cargado por

Copyright:

Formatos disponibles

RIJBFA

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

A Journal of Radix International Educational and

FACTORS CONTRIBUTING TO FLUCTUATIONS IN BSE SENSEX- AN

Dr. Rajesh Bagga

Associate Professor and Offg. Director

Apeejay Institute of Management

Apeejay Institute of Management Jalandhar

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

macroeconomics variables are as foreign exchange reserve, foreign exchange rate,

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

H01: There is no significant impact of Gold Prices on the SENSEX.

H02: There is no significant impact of Oil Prices on the SENSEX.

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

H03: There is no significant impact of Dollar Prices on the SENSEX.

H04: There is no significant impact of Inflation Rate on the SENSEX.

Journal of Radix International Educational and Research Consortium

Volume 1, Issue 4(April 2012)

ISSN: 2277 100X

H05: There is no significant impact of holding of Foreign Exchange Reserves on the