| Abstract: |
This paper presents a systematic review and meta-analytical synthesis of past empirical research examining the relationship between macroeconomic factors and stock market volatility in India. Over the past two decades, the Indian equity market has emerged as one of the fastest-growing markets among emerging economies, attracting significant attention from domestic and foreign institutional investors. Volatility in this market is shaped by a complex interplay of macroeconomic variables including inflation, interest rates, exchange rates, crude oil prices, money supply, and foreign institutional investment flows [1]. This review consolidates findings from more than sixty empirical studies published between 2000 and 2023, drawn from leading finance and economics journals, to identify consistent patterns, contradictions, and gaps in the existing literature. The review is organized around a structured methodology involving systematic search, screening, and thematic categorization of prior studies, followed by a critical analysis that compares econometric approaches such as GARCH family models, VAR, VECM, and Granger causality tests employed across studies [2].
The findings indicate that interest rates and exchange rates exhibit the most consistent and statistically significant relationship with stock market volatility, while the influence of inflation and crude oil prices tends to be more context-dependent and time-varying. The review also highlights methodological heterogeneity, data period discrepancies, and limited use of high-frequency data as major limitations in the existing body of work. The paper concludes by proposing a research agenda for future studies, emphasizing the need for integrated multivariate models, longer time horizons, and behavioral considerations in explaining volatility dynamics in the Indian stock market.
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