A STUDY ON THE EFFECT OF GLOBAL ECONOMIC FACTORS ON STOCK MARKET VOLATILITY

ABSTRACT

The stock market serves as a critical element of the global financial infrastructure, where investors engage in the trading of shares from publicly listed companies. One of the defining characteristics of the stock market is volatility—the frequent and often unpredictable fluctuations in stock prices over time. This volatility is shaped by a variety of factors, including economic, political, and financial influences. Among these, global economic conditions play a particularly prominent role. Due to the interconnected nature of the world economy, developments in one country can have significant ripple effects across international markets. Key economic indicators such as GDP growth, inflation rates, and interest rates are central in influencing investor behavior and market trends. Strong GDP growth typically reflects economic stability and can boost corporate earnings, thereby fostering investor confidence. In contrast, economic downturns or recessions often lead to increased uncertainty and heightened market volatility. This research explores the complex relationship between global economic variables and stock market volatility, aiming to shed light on the underlying mechanisms that drive movements in financial markets.

Keywords: Geo political risk, stock market volatility.