The stock market is considered as the sign of the health of the economy. Any upside and downside in the stock market affects the economy just like Sensex and Nifty in India.
There are other different factors along with slowness which brings the vital change in the stocks like Change in the interest rate, inflation or deflation, and happenings in global markets. These 3 economic factors are considered to be the significant factors.Now let’s see how these factors affect the stock market.
Stock market gets affects due to any change in the Interset rate. Change in the Key policy makes any company borrow less as borrowing becomes very expensive. Due to this the companies starts cutting their spending or laying off the employees in order to compensate for the loss. This will impact the company in a bad way.
Any rise in the average price of goods and services in an economy during a period of time is defined as Inflation in economic.Inflation fall or rise affects the stock in many ways.In case of high inflation, it will be difficult for the corporates to pass on the higher values to the consumers and in the same way, it will affect the consumer also as to buy the goods and services as it becomes pricier.
Global markets affect the stock in many ways. For instance, During a global recession, The companies were not able to sell goods overseas as many as they used to.Resulting in the high fall in the revenue impacting on the stock market as well. Failing in the overseas market will lead investors in anticipating in ripple effect and thus affecting the stock market of the country.