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Research Article Open access CC BY 4.0

Indian Stock Market Developments & Interest Rates: An Association Assessment

Shambhavi Dwivedi, Poonam Vishwakarma, Pradhyuman Singh Lakhawat

Advances in Research · pp. 381–388 · Published 10 Apr 2025

10.9734/air/2025/v26i21305

Abstract

In this research paper, the objective was to map the influence interest rates have on Indian stock market. Monthly frequency data of weighted average of call money (interest rates), closing prices of BSE indices and NSE indices from April, 1991 to March, 2023 are employed for the analysis. Granger Causality proved inconclusive in respect of finding any relationship between variables. In further establishing relationship VAR models are run. Evidence of lead-lag causal relationship from interest rates to the indices, both BSE and NSE exist. The conclusions establish that interest rates do have the capability to drive the Indian stock market movements. Further, analysis can help establish in which direction the interest rates can initiate the Indian stock market progress.

Macroeconomic announcements interest rates Indian stock market augmented dickey fuller granger causality vector auto-regression model

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