The Effect and Volatility of Exchange Rates on BSE Sectoral Indices

Indian economy has the emerging market which offers immense opportunity to increase the development of the country and the economy reforms. The significant growth and development of the Indian economy are driven by some of the factors such as investment decision, infrastructure facilities and proactive government regimes. Indian Stock market offers a significant contribution to investment destination by the movement of prices and also the volatility of exchange rate of the various countries currency. The rate at which one money is converted into another is an exchange rate. Exchange rate volatility is associated with unexpected movement in the exchange rate. The present study helps to analyze the volatility of Exchange rate on BSE (Bombay Stock Exchange) Sectoral Indices through the data collected from the period of January 2014 to December 2018. Using SPSS Software,Descriptive Statistics, Regression, Correlation, Johnson Cointegration test and GRACH model have helped to ascertain the volatility of Exchange rate that determined the movement of prices in the Bombay Stock Exchange Sectoral Indices which provides the relevant information to the Institutional investors and other investors to take investment decision and also helped to frame policies by the government.