Many factors can affect the stock market daily and global events play a major part in the influence they have on it. The intertwining of the stock market’s working and the events taking place on a global scale around us is not a new aspect. In this blog, we will take a look at how global events influence share trading in India to help you navigate through any and every change that the market might face during such times, better.
Impact on Stock Prices
The stock prices of any company are subject to the interest of the investors and the confidence they hold in a particular company’s future. This confidence of the investor is also subject to several external influences. Here is a look at some of them:
- Company’s Performance:
Keeping tabs on a company’s performance provides investors with insight into a company’s financial health. This further helps them understand how profitable the company might be in the long run and whether investing in the stocks of the company would be a good idea for them.
- Industry Trends:
Even if a particular company is doing exceptionally well, investors must keep tabs on the overall outlook of the industry it belongs to. The progress of the industry in question will have an impact on the company’s stock prices.
- Economic Conditions:
Another major condition that might impact a company’s stock prices is the economic conditions that are prevailing in the country and the world. Aspects like a country’s GDP, interest rates and inflation will play a huge role in determining the stock prices all over.
Effect of Global Events on the Stock Market
Having discussed all the influences that exist for an investor when they are seeking to invest their funds into a particular stock, let us now have a look at how various global events affect the stock market.
- Geopolitical Tensions:
With the rise in geopolitical tensions like international conflicts or trade wars, there will also be a rise in disruptions in the supply chains of industries. To add to this, any potential economic activities could also decrease and energy prices might rise drastically. As a result of all this, the stock prices of companies might see a decline.
- Changes in Economic Policies:
When a government chooses to change its policies regarding taxes, interest rates or even the regulations governing share trading in India, the chances of it impacting an industry’s profitability and investor sentiment negatively are high. An increase in the interest rates will make investing in stocks a less attractive prospect for investors which could potentially lead to a stock market sell-off.
- Natural Disasters:
Other global events cannot be predicted; natural disasters like earthquakes, floods, and pandemics. When natural disasters occur, they cause major disruptions across the board and end up curtailing any economic activities. This, in turn, will harm any company’s operations which, in turn, will adversely affect its stock prices.
- Technological Advancements:
Advancements in technology are a great way to keep pace with the ever-growing tech-centricity worldwide. However, when major technological developments are being introduced, entire industries can be affected adversely as the chances of new investment opportunities cropping up will always exist. This will further affect the movement of the stocks in quite a few sectors.
Ways to Stay Informed
With the many changes that global events can bring about where share trading in India is concerned, it is important that investors stay up to date about them to make better investment decisions. Here are a few ways how they can do that:
- Rely on Reputed News Sources:
Investors need to stay connected to reliable and credible news sources like news channels and publications that will act as a constant source of information when it comes to Major global events.
- Putting 2 and 2 together:
Certain global events might seem like they couldn’t possibly have an adverse effect on the stock market. However, investors need to be open to exploring the possibility of such events potentially having a cascading effect later on, on a particular sector or industry.
- Maintain a Long-Term Perspective:
Most global events usually cause more short-term disruptions than long-term difficulties. This is why many successful investors choose to keep the long-term benefits in mind when investing.
Conclusion
Share trading in India is done by involving both the trading account and Demat account that is held by investors. To ensure the proper utlization of both these accounts and to carry out successful trades, it is crucial that investors gauge every aspect that might affect the stock prices and by extension their trades. Global events play a major role in determining stock prices of any country, and staying informed about them can help investors make profitable investment decisions.
Read also: Understanding Market Trends: A Beginner’s Guide to the Stock Market