What is the current trend in the stock market?

Do you want to know the current trend in stock market ?

Does the current trend affects stock market ?

You need to be aware of the factors affecting the stock market. Also if the stock market is in selling zone or buying zone. General rule of thumb in stock market is to buy low and sell high. For that you need to be aware of the lows and highs.

We had seen numerous factors which affects stock market movement in our blogs.

Current trend in stock market :

Stock market is on the rise in the last few months. Just before that we had series of news which had the brakes on the stock market growth. After the announcement of corporate tax rate cut, there was no looking back for stock market.

Generally the stock market is always backed by the strong economic growth activity. As stock market is a mere representation of the economy.

Announcement from finance minister along with news such as, “Government is looking to reduce income tax” along with fiscal prudence is keeping the hopes alive. All these factors had created the momentum alive. FII’s and DII’s are largest buyers whenever there is a huge fall. This further strengthens the belief in the growth story of India.

Further, we are towards the year end and yearly budget is just 2 months away. The ambitious target of 5 trillion dollar economy by 2024 is just 5 years away and the task in hand is huge. For this to happen we need to grow at more than 8-9% per annum for the next 5 years. Now the growth rate has touched less than 5% which causes a worry among the many.

Consumption data is negative, Passenger car sales growth is negative, overall sentiment of people is negative but hopes of higher growth in the next quarter is driving the stock market.

It can also be “Calm before the storm”

Factors outside the stock market :

The trade war between US and China is fuelling every now and then. Both are the largest economies of the world and it will have repercussions across the world. There is US elections by next year and this can further boost the tensions between the countries.

Relationship between South Korea and US, by large was settled with peace and now it is again escalating with tweets between them. Most of the European nation is staring at growth with some on the verge of recession.
Though not sure, the current slower growth rate can be attributed to Demonetisation and GST implementation which created unrest among business community.

Below is the growth rate of India in the last few years,

stock market
Source: Business today

In the last few years, there is always certain stocks which made enormous returns. It all started with small and mid cap stocks. In the last 2 years it is predominantly large cap stocks which is moving the stock market. Stocks like ICICI bank, Reliance are driving the sensex.

Corporate tax reduction is a drastic move which is driving the stock market. Once it losses steam, it needs one such news to grow high. There can be new heights till the budget.

What you need to do ?

Market rewards if you are able to stick to companies with strong growth momentum. Keep investing in quality Large and mid cap companies in small tranches.

Don’t invest your entire amount in one day. Whenever there is a fall, keep investing.

As we all know, most of the times market always does the opposite of common prediction. Invest only a portion of the amount which can be in the market for a long time for 3-5 years.

Be cautious, even if you lose some money just check if it is a good stock with strong fundamentals. If you are not able to find a quality stock, hold on to cash and deploy in tranches as said earlier.

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