The stock market is the foremost pillar of global economic growth. It continues to go up and down, but it is more volatile and concern among investors after the pandemic. The trading strategies are the savior for every investor. To create effective strategies, you need to understand what the market conditions are and what lies ahead. It will help you as an investor to plan how to trade online efficiently. Let us discuss the experts’ views about market situations. So stay ready with your free trading account and a demat account with a registered stockbroker to start stock trading.
What is impacting the Indian markets?
- The global economic recovery has become a concern with the rising pandemic issues across countries. However, there is a moderate pace of recovery in the economic activity, yet, several sectors in the economy are concentrated unstable. Several stocks are rallying irrespective of the company’s fundamentals.
1. Yield bonds
The stressing point is that bond yields have changed suddenly, which has already caused a crash in the US market. And, the Indian stock market, just like any other stock market in the world, is also affected by global market movements. However, there is a little relief now. The long-term yield has declined from 1.75 % to 1.56%.
A gradual rise in bond yields has panicked the stock market. Bond yields matter to equities because investors tend to move to bond markets for a risk-free rate without knowing why this sudden change and dump equities. Investors should note that it rises when inflation is going higher.
What Lies Ahead
- If easy monetary policies continue globally and there will be global liquidity flow, markets may continue to rise. Analysts say that at first, there should be a change on the consumption side. When people of a nation start spending, then the Capex cycle also gets a boost. There is a strong hope for Capital Expenditure (CapEx) cycle revival from Mid June this year in India. Alongside the Capex revival, there is hope for rising capacity utilisations as well.
According to experts, the cement sector may witness the Capex cycle in the next six months. This sector has already recorded capacity utilisations of approx 80℅. As demand and consumption will grow, other sectors also witness the CapEx cycle.
Many analysts hope that the real estate, housing, and construction industry will be a big supporter of economic growth. These industries are capable of lifting a large segment of the economy.
- Like most central banks, the Reserve Bank of India (RBI) will still be quite unwilling to raise rates. It may increase suddenly, but it will happen gradually. This low-interest rate environment affects both the markets and the economy in long-term structural positivity as capital costs go down, which encourages people to take things forward.
Low-interest rates, cut in stamp duty may improve affordability, and people can fulfill their need for homes. It will be helpful in the faster growth of the housing sector as well. As per analysts, it may start contributing one percentage point to the GDP going forward.
Low-interest rates lead to infra cycles. Thus even now, with lower rates, it can bring a rise in economic activity.
What Experts Suggest
Instead of panic-selling, it would be best to rebalance your portfolio. Realign the diverse mix of shares, bonds, gold, real estate, or a commodity as online trading is making buying and selling quicker and easier than ever before.
Major corporations have posted strong results in Q4 2021. These are better-than-expected results that make the market optimistic. Some blue-chip companies have also seen a rise in their stock values on the stock exchanges. This makes investors look beyond the distressing pandemic situation. You can expect an economic recovery in the near term.