With a market falling by 1,624 points on 24th August, 2014, a sudden hooter has started ringing around the country. With already booming USD vs INR ratio making news and now the stock market collapsing, nothing seems to be in place with the financial state of the country. On the other hand, people have been assuring that the things will get normal soon but we are not really sure when will our economy get stable at the micro level.With numerous figures stating that GDP is growing, headlines stating the decline of USD in Indian stock market has left the common man puzzled.
How does Sensex rise and fall?
Sensex rises when investors buy stocks and it falls when they sell their holdings in these stocks. By stocks, I mean the stocks of the 30 companies that make up the Sensex.
With the adaptation of globalisation, there also comes a drawback that a country’s economic fate is sometimes into the hands of other countries and same is the case this time. Its like four wheels of the car and if one gets flat, the balance goes off. Why did this situation had to arise? We questioned ourselves and found the following reason.
Great Economic Wall of China falls
China’s stock market has been influencing the world economy since a long time, China devalued its currency (Yuan), soon after its own economy burst in July. With a devalued Yuan especially to increase the export and to make it more competitive among others, created adverse effect on other economies including India. With Indian exports falling already, and with China ready with lower export costs, it had to affect the Indian market, and it did. China is the largest country by its population and also by the amount of commodities it consumes. Its steep decline have also resulted into the fall of NASDAQ and many other stock exchanges, no one is left unturned and we feel like if the situation getting this worse, every nation has to come up with a plan B to save their markets.
India being part of this web need to handle this situation very well and let’s hope the our market goes up and reaches new heights very soon.
Post by: Arjun Rathod