The market value of firms and the stock prices can be essentially influenced by numerous variables out of which changes in the exchange rate are vital. There's still no agreement on the relationship between stock market indices and exchange rates in spite of the fact that the subject has been broadly examined. The monetary hypothesis clarifies that the value of a firm ought to be affected by exchange rates and interest rates. The upward and downward exchange rate movements may decide the stock prices of the firms. In India, foreign direct investment (FDI) is a vital component of stock prices and the drift of FDI may significantly be influenced by changes in exchange rate either devaluing or increasing in value. Essentially, the exchange rates are influenced by the movements in stock prices.

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Keywords: Market Value, FDI, Hypothesis, Shareholders, Exchange Rates.