Effects of u.s. quantitative easing on indian equity markets

Abstract

This study uses a vector autoregression (VAR) approach to examine the impact of U.S. quantitative easing (QE) on Indian financial markets. A domestic U.S. VAR is used to extract QE shocks, followed by a second-stage VAR that looks at how they are transmitted to Indian macro-financial variables. By substituting indices such as Nifty IT, Bank, Pharma, and FMCG for the overall market index, the study also investigates sector-specific patterns. The findings support the idea that financial variables in developing markets are more heavily influenced by global liquidity flows than by indicators of the actual economy.