Volume : 6, Issue : 12, December - 2017

IMPACT OF MACROECONOMIC VARIABLES ON SHARE PRICE OF SELECT BANKS: A FACTOR ANALYSIS APPROACH

Dr. M. Jegadeeshwaran, Siva Thivya. R

Abstract :

<p>&nbsp;<span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;">The Macroeconomic variables have influenced the share price of banking companies. </span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;">This paper is based on the average monthly data (April, 2007 to March, 2017) of 12 macroeconomic variables. The factor analysis is adopted to derive the macroeconomic factors which determine the performance of stock market in India. Extracted factors were labelled </span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in; letter-spacing: -0.2pt;">namely, Macro Environment, Price Factor and Money Supply</span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;">.</span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in; letter-spacing: -0.2pt;"> Macro environment and money supply are the most influencing factors of share price in select Banks.</span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;"> </span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;">Multiple regression is employed to analyze the impact of identified macro economic factors on share price of the select Banks. </span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in;">It has been established that </span><span style="font-family: &quot;Times New Roman&quot;, serif; font-size: 12pt; text-align: justify; text-indent: 0.5in; letter-spacing: -0.2pt;">there is a strong association between the share price of BSE and NSE.&nbsp;</span></p> <p class="MsoNormal" style="margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;&#10;margin-left:0in;text-align:justify;text-indent:.5in;line-height:150%;&#10;mso-layout-grid-align:none;text-autospace:none"><span lang="EN-IN" style="font-size:12.0pt;line-height:150%;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><span style="letter-spacing: -0.2pt;"><o:p></o:p></span></span></p>