The stock market in India is affected by various factors such as the interest rates, political events, company management decisions and so on. Of these, inflation is one of the prominent factors that have a significant bearing on the stock market. Now a question crops up here is how inflation affects stock market? Well, the answer is pretty much straightforward.
If there is a high rate of inflation in the country, then it is quite obvious that the raw materials, which are available to the companies for the purpose of manufacturing the products, will be available on the higher prices. In such a situation, the company does not have any other option, but to increase the prices of the products. If the product prices are on the higher side, then there may be the situation that the demand for the products may decrease. If the demand is low, then the share prices of the company may dip. If such is a case with most of the companies, then it may ultimately affect the stock market.
If you have invested in the stock market, then during the times of the rising inflation, it is highly important to keep a track of the share prices instantly. Now, the main problem here is that it is a difficult task to take out the laptop from your bag and check out the prices. The situation may become all the more worse if you are in a crowded place where taking out the laptop may become a challenging task. Nowadays, with the improvement in the technology, it has now become a hassle free task to track the prices through the advisorymandi stock market apps. The apps are loaded with the advanced technologies where checking the stock prices instantly has become quite an easy task.
Hahah @CarlosRay always a spot on! From what I understand the guy is offering some trading apps which I doubt that someone will be interested with. We need a filter for this forum…
It may depend upon the type of inflation i.e. Demand pull and cost push. When inflation increases, price rises,purchasing power declines that means one can purchase fewer goods and services which will lead to fall in demand and as a result share prices will fall and ultimately stock market will be affected. Mostly investors wish to increase their long term purchasing power but inflation impacts the value of principal amount.
The stock market is affected by inflation as follows:
• Due to an increase in the prices of various goods and services , it reduces the purchasing power of each unit of currency.
• The sudden increase in general price level can affect the stock prices sharply.
• Due to an overall slump in the economy , the stock prices which are regulated by the demand and supply forces, also tend to decline.
• While a moderate amount of inflation like 2% - 3% may be good for the stock market leading to higher returns for the investors, high inflation can be really troublesome.
Inflation is really powerful as far as its effect on the stock market is concerned. Talking about the investors, their purchasing power goes down with the hike in prices and so they trade less. The stock prices, affected by the demand and supply forces, also go down. But, with a rise in the inflation rate, the yield on equities and bonds increases, as the rate of interest on both gets a hike.
From what I understand the guy is offering some trading apps which I doubt that someone will be interested with. We need a filter for this forum…