Stock market can be dynamic and can have many ups and downs. Learn 10 factors that influences the market during the auspicious occasion of diwali.This information has been brought to you by Kotak Securities one of the leading share broking firm. Visit our website http://www.kotaksecurities.com for more details on our offerings.
10 factors that influence the market during Diwali
10 Factors that Influence the
Market during Diwali
• It is time to gear up for Muhurat
Trading. On Diwali, stock exchanges
allow special trading for a brief amount
of time, usually an hour, as homage to
Lakshmi. The day also marks the start
of a new Hindu financial year called
Samvat, and is considered auspicious
• However, utmost care should be
taken while trading. Here are some
factors to take into consideration.
• If the economy slows, companies feel the pressure. This is, therefore, one
of the biggest factors to keep in mind while trading.
• During such times of slow growth, it is better to prefer stocks which see less
impact or have a significant presence in foreign markets.
imports for raw materials. These are
Hence, any fall in the Rupee’s value
makes imports costly. This directly or
indirectly affects profitability.
companies like IT services actually
benefit from a Rupee fall as they earn
in foreign currencies.
• Prices of goods increase over a period of time. This is called inflation. With
high inflation, companies incur more costs and are forced to hike prices.
• This, however, affects demand. Inflation is, thus, a double-edged sword. It
impacts companies and consumers alike.
fall, the RBI keeps interest rates
high to curb the money supply in the
• This means loans turn costly.
But, it eventually affects demand and
thus slows growth.
• Investors thus prefer a low interest
• India has a vast rural population, which benefits from a good monsoon.
This increases spending in rural areas, which translates to high demand.
• Tractor and two-wheeler makers and consumer goods sector stocks often
cheer a good monsoon.
• India being an import-dependent nation, international price of raw
materials, especially oil, is important.
• Fuel prices affect everyone. It is, thus, an important factor to keep in mind.
US Quantitative Easing
• What happens in the US affects the whole world, including India. The US
central bank – Federal Reserve – buys back bonds from the market to infuse
money as part of Quantitative Easing.
• This money flows into emerging markets like India as foreign investment. It
buoys stock markets and helps companies get funds.
• Any cut in the bond-buying will impact India. The Fed has not indicated when
it will start the cut, but it is widely expected to happen early next year.
• The company’s balance sheet will help you understand how profitable it
is, and will be going forward.
• Never bet on a stock without a thorough background check on the
• Compare the performance of a
stock over a period of time, typically
five years. It reflects the confidence of
other investors in the company.
• That said, track record should not
be the sole judge. Just because a
company jumped 10-fold in the last five
years, does not mean it will do so in
the next five years to come.
• Also compare the performance of a company with its competitors in the
sector. That will help understand the company’s prospects better.
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