The markets have seen many ups and downs, especially post 2008 global economic crisis; it has always been a very volatile and sensitive market. Major investors both retail as well as institutional were affected with the stock investments made previous to that period. Moreover, the effects of the crisis existed for a longer duration than expected. There was an uncertainty as to when the downturn would see a reversal. But this has changed now, with investors becoming more optimistic with the rising indexes.
Economy downturn and some political factors also have impacted the stock movement to a large extent. These policies generally affect the multibagger stocks which are the ones that promise manifold returns on the initial investment values. The movement in these stocks is very intense as and when the elections approach. Investors become very careful with the stocks investments. They need to be very speculative while changing the positions. In fact, it is recommended that they should currently hold their positions as there is huge volatility in the stock market. It is unpredictable to decide upon the exact movement in the stock prices, whether it will move upward or fall. So acting preemptively might not be a wise decision.
The decisions by politics have always influenced both the fiscal and the monetary policy within a country. Such policy changes affect the investment decisions of the investors. They either push the prospects to invest largely (driving factor of creating positive sentiment in the people with respect to the stock’s price going up) or on the contrary investors start withdrawing the long held money into the stocks by anticipating the stock’s underperformance due to the influence of political decisions. It is very important for investors to take stock of the actual condition and movement of the stock however.
Many a times, investors follow others. Such sentiments and the subsequent trend in the actions (buying or selling of stocks) lead to the underpricing or overpricing of the stock of the company. Such sentiments are driven by the various prevailing conditions that ultimately impact the stocks movement. Therefore, it is crucial for every investor to understand the driving force behind the movement and only take a right call. If required, it is recommended to take a help from an analyst or an expert to evaluate the income statements of the company and the stock price movement record.
About the Author
Rajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.Follow @SanaSecurities