How different is investing in share market in India as compared to other countries
4 weeks ago Rohit Shetty 0
In 2015, the US stock markets experienced a crisis no one had foreseen. It brought the leading stocks, banks and even the national financial institutions down. Before the slump, the NYSE was experiencing a strong bull run. Although, the indications stated otherwise, the volatility of the NYSE affected the run of the BSE and NSE as well. It indicated the 4-year merry bull-run of these markets. It created a crisis all across the country that trickled down to developing nations including India. Jobs became scarce, applying for higher education became more difficult and the threat of recession was again very real. More non-residential Indians started migrating back to the country due to the rising living costs in the US cities and the lack of job opportunities.
How do the US market indices influence the Indian market indices?
That makes us wonder how the NYSE could affect the BSE and NSE. How could the fall of the market in the US affect the Bombay stock exchange so much? How did some people not feel the impact even though the actively traded in the share markets? Did some of the market experts actually see it coming? Is it possible to minimize the potential damage such situations can cause to a trade portfolio?
Let us begin by addressing the concern of carried-over impact. The world is more connected than it ever was thanks to the internet, smart devices and unabated access of the users to those devices. Several nationalized financial institutions have made it possible to invest in foreign share markets including the USA and China. The global market is now open to the adventurous Indian traders, who want to make the most of the trading opportunities they have.
How do markets of other countries influence BSE and NSE?
We have been buying and selling in the global market for quite a few years now. It has only become apparent in the last few years, since the trades are now only a few clicks away. Those interested in trading in the international market should remember that the influence of economies with stronger ties and more widespread networks than smaller economies have a strong influence on the other countries. Therefore, the changing economic situation in the US will likely influence the Indian share market more than the changes in the latter will affect the US market.
The NASDAQ, NYSE, NIKKEI, Dow Jones, S&P500, HA NGSENG, Kospi and FTSE are some of the fundamental global market indices that have an extensive impact on the Indian indices including BSE and NSE. Additionally, the currency rates and commodity prices also influence the rise and fall of share prices in the country.
How did the recent drop in oil prices affect the Indian market?
The recent fluctuations (mostly plummeting) in crude oil prices have affected the Indian economy positively. Since India imports crude oil, the price slump has created a big opportunity for India to profit in the distant future. On the other hand, the USA, Russia and the Middle East are facing the threat of a downward spiral since their economy depends on the export prices of the oil. At the same time, aviation, transport and other manufacturing sector companies on India are looking forward to a prosperous run due to the falling prices of the same. It will enable the government to cut back on the subsidies. Experts predict that the lower prices of consumable goods should help the Indian economy thrive.
How to invest in an inter-linked network of economies?
Interlinked economies are sadly not as ideal or well-balanced as we would love them to be. Sometimes, the changes in one economy has no impact on the global market at all. Whereas, the changes in the US and Chinese market indices have the power to change the market trends of almost all economies weaker than theirs. So, here’s what you should do before you jump into the share market –
- Consider long-term investment – There are a few types of Share market investments that stand to make profit in the long run. Wait out the entire economic cycle before making a selling or buying decision. Long-term investments have better chances of performing well since investors tend to hold these shares for over 4-5 years. There hasn’t been a single cycle in the last 25 years when the BSE or NSE has not seen profit.
- Use 24/7 monitoring applications – install at least one market monitoring application that can deliver the updates and news from the Indian market and the international market to your smartphone multiple times a day. You cannot substitute detailed monitoring, analysis, comparison and studies with anything else. For example – if you are interested in the IT stocks, you might want to follow the US market trends closely. USA imports IT expertise from our country. Thus, the rise and fall in the US Dollar will have a direct impact on our revenue.
- Begin at home – millions of factors determine the performance of the trade market. It is obviously easy to understand how the national policies are shaping the BSE and NSE. Keeping track of the fundamentals closer to home is easier than keeping track of the international markets. Whether you want to invest in the Chinese market or the US market in the future, you should always start with the Indian share market. Unless you master the art of interpreting the forecasts and tendencies of stock prices at home, you will have a tough time keeping up with the global market indices.
In short, the global indices and the international markets can be overwhelming. Start small, take less risk and invest in long-term to understand the trends of your local market indices. It has become incredibly easy to buy and sell stocks in the international market. Thanks to the rise of smart devices and round-the-clock connectivity, but that does not mean you should begin by taking a plunge into the foreign share market.
The Indian market is dependent on a number of complex factors. Several countries and their markets influence the value of Rupee and the price of commodities daily. Investing in the Indian market is different from investing in other stronger economies. Depending on the bias of your portfolio, you should consider the factors in the other markets that have the potential to impact the value of your investments. It is safe to say that one set investment strategy will not do you must good even when you are playing in the Indian share market only. You need to make informed decisions depending on global trends. The time and duration of your investment will affect the share prices and investment the most.