Sensex crosses 49,000 mark: Reasons for fluctuations in market indices

Sensex crosses 49,000 mark: Reasons for fluctuations in market indices
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Amidst the surge of coronavirus cases the market was under pressure at the beginning of the first week of May. However, as the week progressed the market gained momentum. The market indices traded by being pumped by global cues and earnings from the Indian Inc.

As per the latest update, Sensex is trading beyond the 49,000 mark as there is a shift by 0.52 per cent. Nifty 50 is at 14823.20 with a change of 0.62 per cent. The Companies NALCO, NMDC, SAIL, TATA STEEL and Vedanta are chronologically the top gainers. Also, as for now, the most active stocks constitute TATA Steel, SAIL, JSW Steel and Hindalco.

Market indices observe daily fluctuations over a period of time. The investor needs to follow up the stock of price patterns to formulate an opinion about the market trends. This has to be done before deciding on a course of action. Stock prices can be volatile for a short period of time. It doesn’t necessarily move in a straight line.

To understand what moves the stock market one needs to understand the causes behind the fluctuations.

Reasons behind the daily rise or fall in the marketing indices:

  • Varied interest rates

A flurry of  movement in the stock market is caused due to varied inerest rate.  As for instance, the Federal Reserve will supposedly up its interest rates by 25 basis points. Considerably, India will also follow up the same. This would result in strengthening the dollar and stressing down the Indian rupee.

Due to rise in crude oil prices and increase in interest rate will lead to outflow of the foreign money and would end up pressurizing the Indian markets. Under these circumstances the investors cut down their expenses and the companies lessen the expenditure. It all results in reduced earnings and lead to plunge in stock markets as well.

  • Inflation

Inflation is the surge in prices of commodities over a longer period. Higher inflation causes reduced investment and higher economic growth in the long run. The fall in the value of money could also lead to a fall in the value of savings.

  • Global markets

Global economic trends has a huge impact on the stock market in India. This is because the Indian stock market is highly exposed to the global economic trends. Over the years these global forums ahave resulted in increased momentum in funding. Inflow of funds has observed deliberate increase and shift in the course oof time.

Nowadays, mot of the funding decisions are based on the foreign market which increases dependency. Therefore the Indian stock market is getting more integrated with the global stock market.

  • Supply and Demand measures

Price of a share in a market fluctuates due to eminent factors of supply and demand equally. As in, if the demand for stock exceeds, the supply or it’s share price also increases. Similarly, if the sellers of stock surpasses its buyer the share price drops.

Market indices therefore come across various scenarios which enhance or subjugates their existence.

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