Chen, Roll, and Ross were one of the first to explore the link between macroeconomic variables and stock prices in 1986. The link between the macro economy and the stock market has intuitive appeal, as macroeconomic variables affect both expected cash flows accruing to stockholders and discount rates. Empirically, the evidence linking macroeconomic factors to the stock market is mixed at best. In this context, the paper, "Macroeconomic Uncertainty of the 1990s and Volatility at Karachi Stock Exchange", by Dawood Mamoon and Eatzaz Ahmad, study the short- to medium-term trends and volatility in Karachi Stock Exchange (KSE) and explore the nature of relationship between stock market activities and a set of macroeconomic variables for the decade of 1990. This paper finds that there is a negative long-run relationship between stock price index and trading volume, which suggests that the stock market has grown in size but its performance in terms of price has deteriorated. This paper also finds that the level of real activity as indicated by manufacturing sector's output, responded positively to the changes in stock price index.

Foreign capital inflows can make significant contributions to the host country's economic growth and development by easing the constraints of low domestic saving and investment. Capital inflows have also helped individual countries to cushion shocks. In this context, the paper, "Trends, Behavioral Patterns and Growth Implications of Foreign Private Capital Flows in Nigeria", by Risikat Oladoyin S Dauda, investigates the trend and behavioral patterns of foreign capital flows and assesses the impact of various components of foreign private capital flows on economic performance in Nigeria. This paper analyzes that there is a positive relationship between foreign private capital flow proxied by Foreign Direct Investment (FDI) and equity or portfolio investment and index of industrial production during the period from 1986 to 2006.

In the era of global integration of financial markets, recurrent economic problems in Africa and constant and multiple efforts by African governments to restructure the economies and modernize the stock exchanges, there is great need to constantly determine the present return characteristics of the African stock markets. In this context, the paper, "Return Distributions: Evidence from Emerging African Stock Exchanges", by Subadar Agathee Ushad, Sooraj Fowdar, Sannassee Raja Vinesh, and Moushumi Jowaheer, scrutinizes the characteristics of the return distributional properties with particular reference to emerging African stock exchanges and compares these returns with a developed market benchmark. The correlation of emerging market returns have also been discussed in this paper.

Economic theory suggests that stock prices should reflect expectations about future corporate performance, and corporate profits generally reflect the level of economic activities. Therefore, the causal relations and dynamic interactions among macroeconomic variables and stock prices are important to formulate the nation's macroeconomic policy. The paper, "Association Between Stock Market Liquidity and Some Selected Macroeconomic Variables: A Case Study on Indian Stock Market", by Som Sankar Sen and Santanu Kumar Ghosh, investigates the impact of five selected macroeconomic variables on Stock Market Liquidity of two premier stock exchanges of India, i.e., Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). This paper also tries to find out the possible nexus between market liquidity of BSE and NSE with some very important economic variables namely Index of Industrial Production (IIP), Consumer Price Index (CPI), Exchange Rate of Indian Rupee against the US Dollar (EXRATE), Gold price (GOLD) and Money Supply (M3).

The potential presence of stochastic long memory in financial asset returns has been an important subject of both theoretical and empirical research. If assets display long memory, or long-term dependence, they exhibit significant autocorrelation between observations widely separated in time. The paper, "Long Memory of the Indian Stock Market", by Ashutosh Verma, studies the long memory of the Indian stock market by examining the daily returns of 60 companies with around 62% of the total market capitalization over a period of five years. This paper also studies the long memory process and efficiency of the Indian stock market.

Foreign Direct Investment (FDI) has been the most attractive type of capital flow for emerging market economies because of its lasting nature and also because it is considered as a vehicle for transformation of the domestic production process through bridging the technological gap. In this regard, the paper, "Position of Foreign Direct Investment in India", by Komal Narang and Ravi Inder Singh, looks at the position of FDI in India. With policy reforms, better infrastructure and a more vibrant financial sector, the inflow of FDI into India accelerated in 2006-07. The trend continued in the current financial year with gross FDI inflows at $11.2 bn in the first six months. The FDI inflows continued to be preponderantly of the equity variety, broad-based and spread across a range of economic activities like financial services, manufacturing, banking services, information technology services and construction. The data of last 15 years from 1991-92 to 2006-07 has analyzed the sector-wise FDI inflows in India.

- Srinivasulu Bayineni
Consulting Editor