Exchange Rate Fluctuation's Effect on the Nifty 50 and Sensex with Special Reference to the Dollars, Euros, and British Pound

Abstract

The NIFTY 50 and SENSEX indices, which measure foreign investment in the Indian stock market, have experienced recent surges, increasing their vulnerability to fluctuations in exchange rates. Numerous studies have indicated that changes in currency can have a significant impact on stock market performance. While existing literature has examined how foreign currency rates affect stock markets in various countries, there is a lack of comprehensive analysis regarding the influence of foreign exchange rates on the NIFTY 50 and SENSEX, particularly with regards to the Euro, USD, and British Pound. This research aims to address this gap by evaluating the effects of foreign exchange rates on the NIFTY 50 and SENSEX, with specific emphasis on the Euro, USD, and British Pound. The analysis of the impact of the Euro, US Dollar, and British Pound on the NIFTY 50 in this research is motivated by several reasons. Firstly, the Euro, USD, and British Pound are among the most widely traded currencies globally and play significant roles in the international economy. Many companies included in the NIFTY 50 may have exposure to these currencies due to international trade, investments, or debt, making it essential to consider their influence when examining the effects of exchange rates on the index.