A Study on the Impact of Macro-Economic Factors on Mutual Fund NAVs

This study explores how key macroeconomic indicators affect the Net Asset Values (NAVs) of mutual funds in India while incorporating behavioral finance perspectives. Using regression, correlation, and Partial Least Squares Structural Equation Modeling (PLS-SEM), the research examines the impact of GDP, inflation, and the repo rate across different categories of mutual funds. The findings support that repo rate has a significant and positive relationship with NAVs, while inflation has a negative impact, and GDP shows a weak and positive impact. In addition, investor sentiment serves as a mediating variable, illustrating that psychological reactions can amplify or dampen macroeconomic impacts on fund performance. The incorporation of behaviorial and econometric strategies presents a more valid picture of mutual fund behavior. Overall, the research emphasizes how economic fundamentals as well as investor psychology together influence mutual fund performance in India's changing financial environment.