Economic factors and prediction of index returns

The economic analysis determines if the economic climate is conducive and capable of encouraging the growth of business sector, especially the capital market. In order to survive and grow in the global economy it is necessary that the impact of factors, affecting the capital market should be known. This study was carried out to see how this phenomenon is taking place in India as well as in the rest of the world. The study was concentrated on some of the economic factors to evaluate whether they affect the share market returns. The study posited that the economic factors like GDP; interest rate and inflation rate affect the stock market returns to some extent but the effect is delayed. Further the study concludes that there are some more factors to that affect the investors’ returns. The study developed new insights into the capital market and the ways of understanding them to the knowledge of the researcher.