Impact of Global Currencies on the Sustainability of the Indian Stock Market

Abstract

Introduction: The Stock Exchange is an economic indicator of sustainability in the global market over an extended period. The Indian economy has observed a downfall in foreign currency in quarter 2 of 2022, as per the reports of the International Monitory Fund. The central banks of many countries have been facing crises because of a piercing decline in their reserves, which is additionally affecting their sustainable performance. The Indian economy is one of the most potentially sound economies emerging as a global leader, and this study is an attempt to understand the economy’s vulnerability to foreign factors.

Purpose: The research explores the impact of the US Dollar, EURO and Japanese Yen on Bombay Stock Exchange and the National Stock Exchange Index.

Methodology: Four variables have been considered for the conduct of the study: Sensex, Nifty, inflation and foreign exchange. Sensex and Nifty have been taken as dependent variables, while foreign exchange and inflation have been taken as independent variables.

The regression analysis has been performed using Microsoft Excel: The variables used for the study are monthly values from January 2011 to December 2020. The specific period is selected to avoid the impact of COVID-19 on the stock market, avoiding biases in the results.

Findings: All the variables are affecting the performance of each other up to a certain level.

Practical Implication: The research chapter will help the investor understand the relationship between many variables and their impact on the stock market, which will assist them in gaining higher profits.

Citation

Narula, I., Dawar, A. and Sehgal, K. (2024), "Impact of Global Currencies on the Sustainability of the Indian Stock Market", Sharma, R., Bhardwaj, I., Grima, S., Sachdeva, T., Sood, K. and Özen, E. (Ed.) Sustainable Development Goals: The Impact of Sustainability Measures on Wellbeing (Contemporary Studies in Economic and Financial Analysis, Vol. 113B), Emerald Publishing Limited, Leeds, pp. 57-74. https://doi.org/10.1108/S1569-37592024000113B005