Interdependency Study of stock Index of India with Reference to Nifty and Indian Currency Exchange Rate

Interdependency of stock index and currency exchange rate is a subject of extensive study for over a decade and attracted many academicians and researchers worldwide. This is very important for every economy after globalization. In Indian context the issue is also an important topic in the post liberalization era. With this backdrop, the current study attempts to explore the causal relationship between stock index return & forex market in India with special reference to NSE Nifty. By using average daily data from April 2014 to March 2018, we found that the Index return has a direct relation with currency return, the causality test shows hat increase in currency exchange return doesn't lead by Nifty return and increase in Nifty return doesn't lead by currency exchange rate