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The Indian economy has seen swung from the balance of payment crises in 1991 to being the fastest growing economy in world, mainly due to the measures taken to open up and liberalise the economy. The liberalisation of economy has resulted in greater flow of capital to Indian stock markets and hence the impact of global events on Indian markets has become more pronounced. The foreign trade has also increased with the liberalisation of the economy. This study analyses the correlation between Indian and some selected Global stock indices from 1987 and 2021 and concludes that the stock index correlation has markedly improved after liberalisation. Further it also analyses the flow of foreign capital into Indian stock markets and the changes in foreign trade. The study concludes that while the flow of foreign capital is aligned with the co-dependence of Indian and foreign markets, the changes in foreign trade do not exhibit this correlation. Hence the stock market correlation and flow of foreign capital could be considered as one of the indicators of the liberalisation of the economy.