An Investigation of Monetary Policy Rates and its Impact on Bank's NIFTY Index

Abstract

Relevance: The stock price inclines to fluctuate when the monetary policy is declared. The monetary policy may have a favourable or adversarial impact on the stock market, and how market players analyse it regarding their expectations.

Purpose: Monetary policy rates will change frequently based on the economic situations. Banks will adopt those changes which can impact the performance of the banks. To know the effectiveness, this study is selected for analysis.

Method: The study uses various data analytical tools like descriptive analysis and statistical tools by which the effectiveness can be analysed between the monetary policy rates and the stock market prices of selected banks in the study.

Result: The findings state the existence of effective of change in policy rates on the stock market price of selected banks. The selected rates except CRR have a significant influence on the price movements of the selected banks.

Conclusion: The Monetary Policy Committee should exercise caution when modifying monetary policy rates, since this can have an impact on the price movements of banks, the nifty index, and other financial institution performance in one way or another.