The impact of domestic gold price on stock price indices-An empirical study of Indian stock exchanges

Abstract

The present research paper examines the impact of domestic gold price on stock price indices in India for the period for the period from 2 nd January, 1991 to 10 th August, 2012 using appropriate statistics, unit root test and Granger causality test. The domestic gold price in India is eternally escalating in consequence of its intense domestic demand on account of protection, liquidity along with spreader portfolio. It give the impression of being at the remarkable data brings to the plane that when the stock market crumples or when the dollar worsens, gold prolongs to be a safe haven investment because gold prices increase in such situations. The study is based on secondary data obtained from World Gold Council database and BSE and NSE database. Unit root test indicates that time series are not stationary at levels and the selected time series are stationary at 1st difference. Granger causality test illustrate that no causality exists between nifty and gold price, gold price and sensex and nifty and sensex and bidirectional causality exists between gold price and nifty, sensex and gold price and sensex and nifty.