Keep Yourself Informed On Stock Market Variables

The term lowest brokerage or cheapest brokerage surely attracts every trader and investor but don’t get carried away with only brokerage rates. Look for a broker who will give you all the help and information you need rather than running after low service charges. The goal is to seek help from a god broker to trade in the stock market and not to run after the brokerage. Anyways, I just want to say that be informed and take good trading decision. You should know that there are many economic factors that can take the stock prices up or down. For instance, the RBI can raise or lower interest rates to stabilize or stimulate the Indian economy. This is known as monetary policy. If a company borrows money to expand and improve its business, higher interest rates will affect the cost of its debt. This can reduce company profits and the dividends it pays shareholders. As a result, its share price may drop. And, in times of higher interest rates, investments that pay interest tend to be more attractive to investors than stocks. Next, if it looks like the economy is going to expand, stock prices may rise. Investors may buy more stocks thinking they will see future profits and higher stock prices. If the economic outlook is uncertain, investors may reduce their buying or start selling. Then, we have inflation. Inflation means higher consumer prices. This often slows sales and reduces profits. Higher prices will also often lead to higher interest rates. For example, the RBI may raise interest rates to slow down inflation. These changes will tend to bring down stock prices. Commodities however, may do better with inflation, so their prices may rise. Similarly, there is deflation.Falling prices tend to mean lower profits for companies and decreased economic activity. Stock prices may go down, and investors may start selling their shares and move to fixed income investments like bonds. Interest rates may be lowered to encourage people to borrow more. The goal is increased spending and economic activity. The Great Depression (1929-1939) was one of the worst periods of deflation ever. Economic and political shocks keep affecting the stock market. Changes around the world can affect both the economy and stock prices. For example, a rise in energy costs can lead to lower sales, lower profits and lower stock prices. An act of terrorism can also lead to a downturn in economic activity and a fall in stock prices.If a new government comes into power, it may decide to make new policies. Sometimes these changes can be seen as good for business, and sometimes not. They may lead to changes in inflation and interest rates, which in turn may affect stock prices.

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