EFFECT OF INVESTOR CONFIDENCE AND MACROECONOMIC POLICIES ON STOCK RETURNS

Abstract

Through this study it has been tried to explore that how the stock return get affected by the investor confidence and the various macroeconomic variables. For this we have tried to establish a relationship to seek how these variables like WPI inflation data, Dollar-rupee exchange rate, 24 carats one ounce gold prices and Brent crude oil prices affect the pillars of market. The data has been collected for the period 2000-2013 For the same BSE-500 index values are taken for stock prices. The values of call and put options are taken for investor confidence. After collecting the data, an analysis of the same has been done with the help of regression model to find that : (1) Macro-economic variables influence the stock prices. (2) Gold Prices have inverse relationship with stock prices. (3) Crude oil prices have positive relationship with stock prices. (4) Investor confidence has positive relation with stock prices. Different hypothesis have been set to validate the above mentioned variables.