Indian stock market: A Coincidental Indicator
of Economy
Indian economy seems poised after union
budget 2016-17 in the positives of domestic economy and negatives of global
economy. Indian stock market has evolved as a main indicator of economy. Not
very far in past, on swearing of Narendra Modi as 15th Prime
Minister of India, there was a stoppable rally in stock market viz BSE Sensex
and NSE Nifty. The Sensex was hovering
around 24,000 on May 2014. From then the stock market was fueled with external
funds from FIIs and DIIs.
The key events reflected strongly by Indian
stock market during 2014-15 were:
- Strong support for the promises of reform and growth (GST, Land bill)
- PM announcement of Jhan Dhan Yojana on Independence day of 2015
- Strong support seen for PM call for FDIs from foreigner and specially NRIs
- Make India campaign, with special reference interests from Chinese investors
- India’s GDP growth rate surpassing the china’s.
- Weakening manufacturing in china and Europe
- Lowering of Indian economy outlook by International and national rating agencies
- Disagreement between BJP and allied political parties
- Degrading of social and religious harmony
- Enfeebled Indian banking systems and weakening rupee
The Indian stock market discounted each and
every happening of domestic as well as global economy with corresponding fall
and rise in SENSEX and Nifty. The Indian robust GDP growth rate collision with
uncertain international business environment was reflected by the sense of
fatigue, cautiousness and fear among investors.
Whether the stock market rises or falls, it
is the indicator of Indian as well as foreign outlook towards continuance of
India’s growth path. The volatility of stock market does communicate about the
risk in economy and business, but is also the main purpose of the stock market
to be able to reflect the investors’ sentiments. With more people in financial system, more
education about economy, investment and finance, it is evident to experience
more volatile Indian stock market in coming times.
Dr. Ajay Kumar Patel
Assistant Professor
Deptt. of Management Studies
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