Investigation of the relationship between macroeconomic variables and BIST-100 index

The significance of this study lies in revealing the relationship between Turkey's leading stock index, Borsa Istanbul (BIST-100), and key macroeconomic indicators. In the literature, studies examining the sensitivity of the BIST-100 Index to macroeconomic variables, especially from the perspective of the Turkish economy, are limited. To fill this gap, this study aims to analyze the relationship between the BIST-100 Index and key macroeconomic variables such as the weighted average funding cost, Consumer Price Index (CPI), USD/TRY exchange rate, and industrial production index.Monthly data from January 2011 to May 2024 were used in the analysis. This period encompasses a broad timeframe during which the foreign investor ratio in Borsa Istanbul shifted from its highest to its lowest levels. Through the methods used in this study, it was found that changes in interest rates have an inverse effect on the BIST-100 Index, while increases in inflation have a positive effect on the index. In other words, as interest rates rise, the BIST-100 Index declines, whereas an increase in inflation corresponds with an appreciation of the index.These findings underscore the sensitivity of the Turkish stock market to economic dynamics, providing important implications for investors and policymakers. The policy recommendations of this study emphasize the importance of interest and inflation policies that support economic growth and stabilize markets. By revealing the interaction between the Turkish stock market and macroeconomic variables, this analysis aims to contribute to financial decision-making processes.