~10~  ISSN Print: 2394-7500 ISSN Online: 2394-5869 Impact Factor: 5.2 IJAR 2016; 2(2): 10-13 www.allresearchjournal.com Received: 23-11-2015 Accepted: 26-12-2015 Iftaqar Ahmad Research Scholar, Department of Humanities & Social Sciences, MNNIT Allahabad, Uttar Pradesh, India. Dr. Jyotsna Sinha Assistant Professor, Department of Humanities & Social Sciences, MNNIT Allahabad, Uttar Pradesh, India. Correspondence Iftaqar Ahmad Research Scholar, Department of Humanities & Social Sciences, MNNIT Allahabad, Uttar Pradesh, India. A study on relationship between macro-economic variables and stock market performance with reference to BSE-Sensex Iftaqar Ahmad, Dr. Jyotsna Sinha Abstract Predicting movements in the Bombay Stock Exchange (BSE) is perhaps one of the hardest exercises in financial studies as it has many variables affecting its movement. In this paper I have taken two macro variables i.e. Gross Domestic Product & Exchange Rate and collected 12 months secondary data for the year 2014 from the website of RBI and Sebi. The data collected has been analyzed by using spss through correlation, regression and ANOVA in order to draw meaningful information. The findings show that GDP is the significant predictor and Exchange Rate is not the significant predictor of BSE Sensex. Keywords: GDP (Gross Domestic Product), ExR (Exchange Rate), SnX (Sensex) Introduction A stock market or stock exchange is a market where securities are bought and sold. In this market the shares of public as well as private companies are traded thorough exchanges or the OTC (over the counter) markets. It is one of the oldest stock market in Asia. Its origin dates back to 18 th century when East India Company use to transact loan securities. Since the year 1991, when the government adopted LPG (liberalization, privatization and globalization), stock market of India has undergone tremendous change. The Indian Economy grew at an alarming pace after the adoption of LPG. That is why the stock market of India plays a very important role for aggregate economy. The capital market of India is one of the emerging markets in the world. That is why investors in India and abroad have keen interest for investment purpose in the Indian stock market. There is the need of the hour to study and understand the key variables that influences the shareholders wealth. The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India. It was established in the year 1988. SEBI has enjoyed success as a regulator by implementing reforms as and when needed. It introduced rolling cycle of T+2 which means settlement is done in 2 days after Trade date. Sebi has been active in setting up the regulations as required under law. BSE The BSE Sensex or simply the Bombay Stock Exchange is a Sensitivity Index which is also known as BSE 30 or simply the SENSEX is a free-float market weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. These are the companies which are some of the largest and most actively traded and are representative of various industrial sectors of the Indian economy. The index is calculated based on the free float capitalization method. As per free float capitalization methodology, the index reflects value of 30 component stocks and it is determined by multiplying the price of its stock by the number of shares issued. For new companies seeking listing on the exchange and de-listed companies seeking re-listing on the exchange, the minimum post- issued equity capital requirement is Rs.10 crores. Gross Domestic Product GDP is a measure of the size of an economy. It is defined as the aggregate measure of production which is equal to the sum of the gross values added of all resident, institutional units engaged in production plus any taxes and minus any subsidies. International Journal of Applied Research 2016; 2(2): 10-13