INVESTIGATING THE IMPACT OF GOLD PRICE AND EXCHANGE RATES ON SENSEX: AN EVIDENCE OF INDIA

Amalendu Bhunia () and Sanjib Pakira ()
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Sanjib Pakira: Maharaja Manindra Chandra College, Kolkata, India

European Journal of Accounting, Finance & Business, 2014, vol. 2, issue 1, 1-11

Abstract: The present paper investigates the impact of gold price and exchange rates on sensex in India for the period from January 2, 1991 to October 31, 2013 using daily data with the application of unit root test, Johansen cointegration test and Granger causality test have been designed. In other words, this paper investigates the affiliation between three financial variables of gold price, exchange rates and sensex between 1991 and 2013. In recent times, Indian investors are demonstrating uncase in the stock markets due to continuous rising of gold prices on account of no fear and no future loss. Again, exchange rate fluctuations will affect international trades, thus influence the stock market. Johansen cointegration test result indicates that there exists a long-term relationship among the selected variables. Granger causality test result shows that there must be either bidirectional or no causality among the variables.

Date: 2014
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