Impact Of Stock Market On Indian Economy

In the global economy, the growth and development of stock market of any country depends on the financial system and economic fundamentals. The well established financial system provides the necessary financial inputs for the production and services. The strong economic policies and economic indicators are support the standard of living of people and influence the growth of an economy. Before, liberalization, privatization and globalization, most of the economy as consider as closed economy, the growth and opportunity was confined within the country. After 1991, Liberalization, Privatization and Globalization was established, the majority of the countries became open economy and highly connected with global market. The macroeconomic variables …show more content…
The stock market growth depends on economic fundamentals and its related issues and problems. The stock market is perceived as a very significant part of the financial sector of any economy. Moreover it plays a vibrant role in the utilization of capital in many of the emerging economies. Generally the stock market is affected by the many factors such as highly interaction of internal and external economy, international political, economic variables, social and investor’s sentiments and also these factors influencing each other in very intricate manner. The impact of economic fundamentals on stock market or stock returns has been a long debated issue amongst the academicians and professionals. Most of the time, stock markets don’t react to certain news at all. In India, economist, analysts and financial policy makers have been doing number of studies on this subject but not yet they have concluded. In the financial market, some analysts were concerned about a Price Bubble created in the stock markets. Normally a financial bubble rise when the market prices are not reflective of the actual …show more content…
The effects of the global crisis have directly affected some important macroeconomic variables and resulted in decline in the foreign exchange reserves held by RBI, fall in the external value of the rupee against US $ and decline in the stock market. Though Indian stock market has been grown as source of raising financial resource from corporate and grabs the attention of global investors and ascendency of foreign institutional/portfolio investors has been quite persistent after 1991s. Especially, emerging country like India being a prominent indicators of an economy which reflecting the economic activities in the