Impact of Macroeconomic Variables on Stock Market Performance in India: Evidence from Nifty 50 Companies

Abstract

The present study examines the impact of selected macroeconomic variables on stock market performance in India, with specific reference to the Nifty 50 Index during the period from June 2025 to May 2026. The study aims to analyse the movement of Nifty 50 closing values and to evaluate the influence of CPI inflation, repo rate, USD/INR exchange rate, and India’s 10-year government bond yield on equity market performance. The study tests the null hypothesis that macroeconomic variables do not significantly affect stock market performance in India against the alternative hypothesis that they exert a significant influence. A descriptive and analytical research design has been adopted, based entirely on secondary data collected from recognised institutional sources, including NSE India, MoSPI/NSO, RBI MPC, FBIL, CCIL, and RBI DBIE. Since CPI inflation data for May 2026 were unavailable, inferential analysis was conducted using eleven valid monthly observations from June 2025 to April 2026. Descriptive statistics, trend analysis, Pearson correlation analysis, and multiple regression analysis were employed for empirical examination. The trend results reveal that the Nifty 50 declined from 24,812.05 in June 2025 to 23,643.50 in May 2026, representing a fall of 4.71%, while the rupee depreciated and bond yields increased during the period. Correlation analysis identified significant negative relationships between Nifty 50 and CPI inflation (r = -.682, p = .021) and between Nifty 50 and the 10-year bond yield (r = -.776, p = .005). The regression model reported R = .865 and R² = .748, indicating considerable explanatory power; however, the model was not statistically significant at the 5% level (F = 4.449, p = .052). Accordingly, the null hypothesis is not rejected at the 5% level, although marginal evidence of macroeconomic influence is observed at the 10% level. The findings underscore the relevance of macro-financial stability for equity market performance, subject to the limitation of the short study period and small sample size.