Analyzing the Linkage of Capital Market to Economic Trends in Long-Run and Short-Run Time Series in Indian Pharmaceutical Companies

In the financial markets, where macroeconomic parameters demonstrate the performance of an economy, stock return variation draws attention to market uncertainty and shifting expectations on industry/company performance. This study looks into the stock return variation of 25 Indian pharmaceutical businesses and macroeconomic factors such as Inflation, Interest rate and IIP before and after the COVID-19 pandemic that erupted in November 2019 using the Granger Causality test and Johansen Co-integration test to study the short-run and long-run interlinkage. The study aids in gaining a better knowledge of the interdependence of stock volatility and macroeconomic conditions to make better investment decisions.