Factors Affecting Stock Markets
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

Factors Affecting Stock Markets

Factors Affecting Stock Markets
  • 29th Aug 2022 |
  • 2,590

It would be challenging to find an individual who would disagree that inflation has a crucial role in reducing the value of our savings and creating obstacles to meeting our financial goals. In such conditions, making prudent investment decisions becomes vital. Investment is nothing but putting your money to work and generating extra income. It not only helps you attain your financial goals but also provides financial security. Numerous investment tools are available in the financial market, such as stocks, bonds, gold, real estate, etc. However, investing wisely in the stock market is one of the best ways to generate wealth.

Before investing in the stock market, it is recommended to find answers to questions like:

  • What are the factors affecting stock markets?
  • How do factors affecting the stock exchange affect your returns?

If you seek answers to these questions about the stock market, you have landed at the right spot!

Invest Now

What is Stock Market?

The stock market or share market is where stocks, shares, and other financial securities are exchanged. It is considered a part of the free-market economy, allowing the investors to benefit through capital gains and adds to the country’s economic growth. Stock market investments can be risky owing to the market fluctuations, but the payoff is also higher than other investment tools. However, one can invest wisely with a diversified portfolio to minimize the loss. Therefore, it is only fair to understand the factors affecting the share market.

What are the Factors Affecting Stock Market?

Knowing what stock market is not enough. To earn returns you should also know about factors affecting stock market returns. Here they are:

Supply and demand

One of the main factors affecting the share market is the imbalance between supply and demand which leads to the increase or decrease in the price of stocks. In addition, factors such as economic data and interest rates affect the demand for stocks leading to fluctuations in the value of stocks.

Interest rates

The governing body, the Reserve Bank of India (RBI), regulates interest rates, directly influencing the price of stocks. When the interest rate is low, the companies can borrow a considerable amount at a lower interest, resulting in their profits due to an increase in the stock price. On the other hand, higher interest rates lead to lesser profits and reduced stock prices.

Political factors

There have been multiple political factors affecting stock markets. For instance, the price of stocks goes down in case of risk of war, weak government, public outrage against the government, etc. Budget announcements or elections significantly impact the volatility of the market, affecting the stock prices. Moreover, the new government policies introduced regarding the Indian economy can affect the share market. In addition, the value of stocks is also reduced in case of riots or political turmoil in the country.

In addition, there is also a possibility that stock market(s) and traders respond in a biased manner for right-winged government, as compared to the left-winged.

Natural calamities

Natural calamities and pandemics such as floods, earthquakes, and pandemics such as Yellow Fever, Ebola and the recent COVID-19 one too, can drastically affect the value of stocks. Due to the stock prices are bound to fall due to the destruction of property, finances, and other assets. It affects not only a company’s performance but also people’s capability to spend.

Inflation

Inflation directly affects the finances of people resulting in reduced capacity to invest. Moreover, increased inflation rates discourage people from investing, making companies suffer. Hence, inflation has a critical role in affecting one’s investing power, purchasing power, and the country’s overall economy.

Conclusion

It is worth noting that investment includes risk, but it can be minimized if the investment is backed by sound knowledge and research. Stock prices are driven by numerous factors such as interest rates, natural calamities, political factors, etc. Therefore, one should consider the factors affecting stock markets and allocate their assets accordingly. The proper allocation strategy will not only yield higher returns but also mitigate the risk involved.

Kotak e-Invest

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

Download Brochure

Features

  • Return of Mortality Charges*$
  • Enhanced Protection
  • Multiple Plan Options
  • Zero Premium Allocation Charges
  • Tax Savings^

Ref. No. KLI/22-23/E-BB/521

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

Short Term and Long Term ULIP Plans for Wealth Creation

Creating a second source of income with life insurance

Investments Options to Buy a house in India

What are the Best Investment Options for Students in India?

Why Do You Need A ULIP Plan - All You Need To Know

What's Better for Your Child's Education? Child Plans or Mutual Funds?

What is ULIP Renewal?

What are the Best Investment Options for Beginners or Amateur Investors in India?

Benefits of ULIP as a Child Insurance Plan

Customising investments to manage your wealth

How to Manage Your Portfolio Like a Professional?

How To Track ULIP Performance?

Are Money Back Policies Helpful? A Complete Guide

ULIP Investment Strategy: Top Tips to Improve Your ULIP Gains

How is the Compound Annual Growth Rate (CAGR) Calculated in ULIP?

What is the Importance of Saving Money?

Things to Know Before Buying an Endowment Plan

Best Investment Options to Cover Your Child's Education

How to Plan Savings from Salary?

Investment Options for NRIs in India

How to Plan Your Child's Education - A Step by Step Guide

What are the Best Short-Term Investment Plans with High Returns?

What are Tax-Deferred Savings Plans?

उच्च रिटर्न प्राप्त करने के लिए सर्वश्रेष्ठ इन्वेस्टमेंट विकल्प

Learn About Safe Investments with High Returns in India

What are Some of the Safest Investment Options in India?

Why Should You Invest in Term Insurance And ULIP?

Early Investing and the Power of Compounding

Which is a Better Investment - Mutual Funds Or ULIP?

Why ULIP is Better Investment for Long-Term Wealth Creation?

Endowment Plan vs Fixed Deposit?

How to Increase Net Worth Along with Family Protection

How To Diversify Portfolio In 2022?

Basics of Guaranteed Savings Plan

Debt ULIPs vs. Debt Mutual Funds: What's the Difference?

What are Deferred Savings Plans?

Successful Financial Planning for Urban Women

ULIP vs FD - Which is Better and Why?

Building wealth through regular investing

Best Long-Term Savings Plans in India in 2022

Receiving regular payouts at various stages of life

What are Mutual Funds?

Who Should Invest in Savings Plan?

Safe Investment Options with High Returns for FY 2018-19

How to Manage Inheritance Money?

ULIP Benefits You Can Avail from Early Investing

Best One-Time Investment Plans in India

Do You Know the Difference Between Savings and Investment?

Asset Allocations in ULIP - Know the Top Benefits

3 Tips to Buy Guaranteed Savings Plan

4 Important Tips to Maximize Gains with ULIP Investments

Beginner's Guide to Wealth Creation: Meaning, Strategies, & Importance

Why is Portfolio Diversification Important? How to Diversify Your Portfolio?

Are Gains from ULIP Sale Taxable?

Importance of Portfolio Management

Difference Between Guaranteed Savings Plan and Guaranteed Income Plan

Is This The Right Time To Invest In ULIP? Why or Why Not?

How to Cancel ULIP Policy?

Which is Better – FD, Mutual Fund, SIP, or ULIP?

How to Make Your Financial Portfolio?

Why Should Parents Invest in Endowment Plan?

How Does an Endowment Plan Work?

What is a Savings Plan and What are is Benefits?

Difference Between Guaranteed Savings Plan and ULIP

Top 10 Investment Strategies to Create Wealth

What is better - Guaranteed Savings Plan or Fixed Deposit?

Which are the Best Investment Plans for Indian Senior Citizens in 2022?

Difference Between Passive and Active Investing

What are the Best Investment Options for Young Adults?

ULIP Plan as a Gift

Best Investment Options in India in 2022

What are the Best Investment Options For Females?

Top 5 Investment Options in 2022 for Healthy Returns

4 Benefits of ULIP Fund-Switching Feature

Complete Savings Plan for Low Income Earners

Can ULIP Help in Achieving Short-Term Financial Goals?

How to Fulfil Your Financial Goals in the Next 10 Years?

Learn About Safe Investments with High Returns in India

Planning for Your Child's Higher Education? Explore These Investment Options

How Can a Legal Nominee Claim ULIP Benefits are the Policyholder’s Death?

How Much Wealth Can You Create from ULIP in 10 years?

Planning Financial Goals and Objectives of Financial Planning

ULIP as an Investment for Your Child

How Do One-Time Investment Plans Work?

Top 6 Investment Plans Available in India

How to Plan your Investment to Achieve Periodic Financial Goals?

Why Should You Consider Guaranteed Savings Plan for Long-Term Investment?

Top 5 Principles That Need to be Followed for Wealth Creation

How to Start Saving Money in 10 Simple Ways?

Important Questions You Must Ask Yourself When Buying a ULIP Plan

What is Fund Switch in ULIP? And ULIP Fund Switching Techniques

Savings Plan for Grandchildren

Different Types of Endowment Plans