Exploring Causal Relationships between NSE India and Global Stock Exchanges: An Empirical Analysis

Abstract

This empirical study aims to explore the causal relationships between the National Stock Exchange of India (NSE) and major global stock exchanges, including the Shanghai Stock Exchange (SSE), Euronext (Pan-European), the Australian Securities Exchange (ASX-200), the London Stock Exchange (LSX), NASDAQ, and the New York Stock Exchange (NYSE). The primary objective is to investigate how these markets are interconnected and whether fluctuations in one market have a significant impact on others. Using time-series data and statistical tools such as Granger Causality and Vector Auto Regression (VAR), the study examines the causal linkages between these global stock exchanges. The findings provide insights into the extent of interdependence between emerging and developed markets, with a special focus on the impact of the NSE on global indices and vice versa. By understanding these relationships, investors can make more informed decisions, and policymakers can better assess the global economic linkages. This analysis is crucial in today’s globalized financial environment, where stock markets influence each other’s performance. The results have implications for portfolio diversification, risk management, and investment strategies across borders. The study highlights the importance of recognizing market correlations, particularly during periods of economic turbulence or market volatility.