Zebu blog

Tag: inflation

  • The Role of Economic and Political Factors in the Indian Stock Market: Insights for Investors

    As an investor in the Indian stock market, it is important to understand the various factors that can impact the performance of your investments. Economic and political factors can have a significant impact on the stock market and it is essential to be aware of these influences in order to make informed investment decisions.

    One of the most significant economic factors that can affect the Indian stock market is the state of the country’s economy. The stock market is closely tied to the overall health of the economy, as companies’ profits and stock prices are largely dependent on economic conditions. Factors such as GDP growth, unemployment rates, and inflation can all impact the stock market. For example, a strong economy with low unemployment and steady GDP growth may lead to an increase in stock prices, while a struggling economy may lead to a decline in stock prices.

    Political factors can also have a significant impact on the Indian stock market. Changes in government policies and regulations can affect the performance of specific industries and individual companies, which in turn can impact the overall market. For example, if the government enacts policies that are favorable to a particular industry, it may lead to an increase in stock prices for companies in that industry. On the other hand, if the government enacts policies that are unfavorable to a particular industry, it may lead to a decline in stock prices for companies in that industry.

    In addition to economic and political factors, other external influences such as global market trends and geopolitical events can also impact the Indian stock market. It is important for investors to be aware of these factors and to stay up-to-date on current events in order to make informed investment decisions.

    So, what can investors do to navigate these complex and constantly changing economic and political factors in the Indian stock market? Here are a few tips:

    Stay informed: As an investor, it is important to stay informed about current economic and political developments in India and their potential impact on the stock market. This can involve reading financial news, following economic indicators, and keeping track of government policies and regulations.

    Diversify your portfolio: By investing in a diverse range of assets, you can help mitigate the impact of economic and political events on your portfolio. This can include investing in different industries and sectors, as well as investing in both domestic and international markets.

    Have a long-term perspective: While it can be tempting to make impulsive investment decisions based on short-term market movements, it is important to maintain a long-term perspective. This can involve setting clear investment goals and sticking to a long-term investment plan, rather than reacting to every market fluctuation.

    Seek professional advice: If you are new to investing or unsure about how to navigate the Indian stock market, seeking the advice of a financial professional can be helpful. A financial advisor or investment professional can provide guidance on how to build a diversified portfolio that is aligned with your investment goals and risk tolerance.

    In conclusion, economic and political factors play a significant role in the performance of the Indian stock market. By staying informed, diversifying your portfolio, maintaining a long-term perspective, and seeking professional advice, you can make informed investment decisions and navigate these complex and constantly changing factors with confidence.

  • Why The Rupee Is Falling And What It Means For You

    The value of the rupee goes down every day. This year was the first time it went up to 80 against the dollar. Due to several global economic factors, the Rupee has been fluctuating and eventually, it hit a new record low and went past the psychological 80-per-dollar mark.

    What does it mean for a “rupee” to “drop”?

    When the Indian rupee loses value against the dollar on the foreign market, what does it mean for the economy? This means that when India imports from the U.S. or any other country, it will have to pay more because the payment is made in dollars. In other words, less import will cost more.

    India imports a huge amount of things: 20.96% of its GDP. Mineral fuels, oils, electrical equipment, nuclear reactors, mechanical appliances, jewellery, and many other things are among them. Since all of these imports are paid for in dollars, the fall in the value of the Indian rupee against the dollar is having an effect on these industries.

    1. Energy

    Over 85% of India’s oil and 50% of its gas come from outside the country. As the value of the currency goes up, this industry is losing money. The prices of crude (Indian Oil, BPCL, HPCL, RIL, and Nayara) and gas (GAIL and GSPC) may go up for companies that buy them.

    2. FMCG

    About half of the costs come from importing raw materials like crude oil and palm oil derivatives. Businesses are now raising their prices to make up for the higher costs of the things they use.

    3. Technology

    India will buy an average of $56.73 billion worth of electrical and electronic goods from other countries. A huge 40–60% of all input costs, including component costs, come from outside the country. This number goes up to 70–80% for cellphones. Since the value of the dollar has gone up, they may cost more.

    4. Telecom services

    Importing network equipment costs the telecom industry about $6 billion per year. When the rupee falls in value, the cost of imported goods goes up.

    5. Alternative Energy

    Most of India’s solar power projects use imported solar cells and modules. Because of this, the cost of the project will go up. For example, the next bids will have higher tariffs.

    Why is the rupee going down?

    The main reasons for this rupee depreciation are the rise in crude oil prices, the withdrawal of foreign capital from the Indian market, and the regularity of business in India. Early stock market statistics show that foreign institutional investors sold more than they bought on the capital market.

    What difference will it make to you?

    The price of imports will go up because the rupee is losing value. Since the rupee has gone down against the dollar, importers will now have to pay more for the same thing at the same price and amount. Those who wanted to study abroad during this time would have to pay more for tuition. People who live abroad but have family in India will pay more to send money to them because they send more rupees overall. But when the rupee falls, the cost of exports goes down.

  • What Factors Affect Gold Prices?

    Even though the stock market has had a rough few months, gold is still highly valued, especially in India. India is one of the two biggest consumers of gold in the world, along with China. Each year, India uses more than 25% of the world’s gold.

    Demand for jewellery in the country goes up a lot during the wedding and holiday seasons, which often drives up the price of the item. Even if this rise in demand and price for gold is due to this, there are other factors that affect gold prices across the country. In one of its reports, the World Gold Council (WGC) said that income and the price of gold are two important factors that have a long-term, large effect on consumer demand.

    Some other things that can affect the price of gold are:

    Inflation

    Inflation, which is when the prices of goods and services go up, could have a big effect on the price of gold. Most of the time, inflation has a direct effect on the price of gold. Since inflation makes money worth less, the price of gold usually goes up when inflation goes up. This is because when inflation is high, people tend to store their money in gold because they think its value will stay the same over time. This makes the demand for gold go up. So, gold can also be used to protect against inflation.

    Interest rates

    Historically, interest rates and gold prices have had the opposite relationship. When interest rates go up, people often prefer to sell gold to make more money. But when interest rates go down, more people decide to buy gold, which drives up both its demand and price.

    Festive seasons

    Gold has always been seen as a strategic asset in Indian homes, and it has also become a part of Indian culture. Gold has a special place in the lives of Indian families, from being used in wedding ceremonies to being worn as jewellery on important holidays like Diwali. Gold prices go up during wedding and festival seasons because people want to buy more of it.

    In 2019, the World Gold Council (WGC) did a study that found that Indian families may have as much as 25,000 tonnes of gold. This makes India the country with the most gold in the world.

    Pleasant Monsoon Rains

    Studies show that rural India uses up to 60% of India’s total annual gold use, which is thought to be between 800 and 850 tonnes. So, the agricultural market has a lot to do with the demand for gold in the country, and the farmers’ incomes depend a lot on how well their crops do. When the monsoon rains are good, there is more demand for gold in the country. This makes farmers, who use about a third of the country’s gold, buy gold to build their wealth.

    Reserves on Treasury

    Like the central banks of most other countries, the Reserve Bank of India keeps gold reserves along with their money. The price of gold goes up when the RBI starts to buy more gold than it sells. This is because there isn’t enough gold and there is more cash coming into the market.

    A Way to Deal with Uncertainty

    People often choose to invest in or buy gold as a commodity when the market is volatile. This could be because of a slowing economy or trouble in the government. Gold is seen as a good alternative when other assets lose value because its value stays the same over time. Also, because uncertainty isn’t a number, it has more of a psychological effect on gold prices than other factors.

    Politics and geography

    India is one of the countries that uses gold the most, so any change in the price of gold on the international market would affect how much it costs there. Investors also see gold as a safe place to put their money during times of political uncertainty or geopolitical unrest. This increases the demand for gold, which drives up its price. During times of crisis, people tend to buy more gold, which makes it a good way to store money. Other types of assets, on the other hand, would often lose value during these times.

    What the Rupee Does to Gold

    It is important to understand how the relationship between the rupee and the dollar affects the price of gold in India. Since most physical gold is brought in from other countries, the price of gold in rupees will go up when the rupee falls against the dollar. So, a falling rupee could make India less interested in buying gold.

    Conclusion:

    Gold, which is seen as a valuable financial asset, is one of the most popular ways to invest in India. Investors often turn to gold as a safe place to put their money during uncertain times like geopolitical turmoil or trade disputes between countries. But gold prices in the country are also affected by things like inflation, interest rates, and the rupee-dollar exchange rate.

  • The Impact Of Inflation On The Forex Market

    The foreign exchange market, or forex, is a very volatile place. Volatility is what makes liquidity on the forex markets. As liquidity goes up, your chances of making money on your investments go up. But inflation is the main thing that is keeping the FX market from going up. This makes things hard for forex traders. Because of this, online currency trading also suffers.

    The rising rate of inflation around the world has caused a major Forex crisis that has messed up all previous financial calculations. The forex market is having a hard time right now because investors are getting scared and moving their money to safer places like fixed-income securities and gold.

    Inflation Across the Board

    When prices go up past a certain point, this is called inflation. This is what happens when a currency tends to lose value. Because of this, prices have gone up. When currencies lose value, the prices of goods slowly go up over time. The rise in commodity prices makes it harder for people to buy things. This is called the “depreciation of capital.” In this situation, online forex trading, which was once a priority for a forex investor, is now a liability. When people can’t buy as much, the market is more likely to get out of balance because the demand for foreign currency drops. When people’s ability to buy things goes down, inflation is more likely to start.

    This is true for both stock markets and FX markets. If you planned to open a demat account because you wanted to make money on the stock market and inflation is taken into account, the same no longer holds true. Some people think that the current situation in the world is just a sign of an upcoming recession. This is backed up by how investors act all over the world, not just in India. Most investors are told to put their money in “safe” things like gold and oil.

    Events around the world and money

    Not only is inflation making things worse, but there are wars happening all over the world, which makes it harder for global currency markets to recover. Investors are more worried than ever because of the conflict between Ukraine and Russia and, more recently, China’s recent military actions on Taiwanese soil that are seen as a provocation. So, fear of a recession caused by events around the world is a big reason why prices are going up. Recently, investors were looking forward to starting online currency trading as a result of the end of a global health crisis. However, more problems came up, and investors stopped trading again. Because everyone is worried about inflation, the expected boom in IPOs has also died down.

    How Inflation Affects Foreign Exchange

    Online forex trading has suffered a lot, just like many other types of business. Forex is an “over-the-counter” digital market where currencies are bought and sold. Since forex is traded in pairs, the value of each currency is judged in relation to the other currency in the pair. The value of a currency is based on how well the economy of the country whose currency it is is doing. When you buy a country’s currency, you are actually buying a piece of that country’s economy. If you think a currency has good prospects, you are more likely to buy it. You won’t invest in a country’s currency if it has inflation, which has happened in a lot of countries in the past few months.

    Various Investments

    Inflation can make it hard to do any kind of financial business, like trading currencies. Even if you can’t trade on Forex right now, you can still open a demat account with Zebu and invest in the stock market, which seems like a good idea.

  • Top Forex Trading Mistakes To Avoid

    India has recently become a popular destination to trade currencies online. More and more people want to profit from changes in currency prices, so they are getting into the currency market. If you want to start doing intraday trading in forex, this post is for you. Here are some of the most common mistakes that both beginners and experts make, along with suggestions for how to avoid them.

    1. Relying on leverage a lot

    There are two things to know about trading with leverage. You may be able to open a big position with a small amount of the transaction’s value. If the deal goes well, using a lot of leverage can help you win a lot more. But if the deal doesn’t go as planned, you could also lose a lot of money.

    To avoid making this mistake, you should always be careful about how much leverage you use. You should only use leverage if you can afford to lose it. In this way, you can protect yourself from large losses a lot.

    2. Ignoring technical indicators of trading

    The daily price changes on the currency market are affected by technical factors. Online forex trading is a sure way to lose money if you don’t know about or pay attention to technical trading indicators.

    To avoid this mistake, base your trades on technical indicators like MACD and candlestick patterns. This will help you predict how prices will move and make the right changes to your holdings.

    3. Trading for revenge

    Losses are a part of investing online that can’t be avoided. This is true even when it comes to the currency market. But when they lose money, a lot of traders give into revenge trading. Revenge trading is the act of trying to make up for losses by increasing trading capital.

    But this is not a good idea. If you give in to your feelings when trading, you will make bad decisions. To avoid this, you should always take a few days off after a loss to heal. In the meantime, think about and reevaluate your losing trade to figure out where you went wrong. Because of this activity, you will get better at trading.

    4. Taking positions before the news comes out

    This is a mistake that a lot of traders, especially new ones, tend to make. They make trades right before important news comes out so they can make money off of the volatility. Most of the time, though, that kind of move doesn’t work.

    During times of high volatility, when you trade forex online, the price changes may come as a surprise. Even if the news is good, the changes in the price of the currency pair might not be right.

    The best way to avoid making this mistake is to avoid trading before any news comes out. Wait until the news event is over and the market has calmed down before making any trades.

    Conclusion

    Before you start a forex transaction, you should always make a plan and stick to it. Put in place the right stop losses as well to lower risks. So, if you want to learn more about FX online trading, you should contact Zebu right away. For forex trading, you need a demat account and a trading account. Both of these can be opened online in just a few minutes.

  • How to Invest in the Stock Market During Inflation

    The economy is always changing, and it can be hard to make investments when things are always changing. Investors are having a hard time right now because the economy is showing all the signs of inflation. So, how do investors invest now, especially if they want to put their money in the stock market?

    Are you planning to invest in the stock market? If yes, then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share market brokerage firm we also understand that online brokerage is a major problem, hence offer lowest brokerage options to our customers

    With higher rates of inflation, the IPOs of startups going public are becoming an ever more appealing way to get people to invest. But it’s worth going back in time to get a better idea of how the economy worked in the past. The last 10 years, from 2011 to 2020, had low inflation and moderate growth. During the first decade, especially from 2002 to 2007, growth was higher, but inflation went up.

    We are at a time when growth is slow and prices are going up fast. There is a lot of uncertainty in the world today, and rising geopolitical tension is making it worse. But even though the markets have recently gone down, starting prices are still high. If you want to trade stocks when inflation is high, you can, but you should be careful.

    How the Indian economy is doing

    The Indian economy is in a macro situation right now, which can hurt most emerging markets. Many countries with “emerging markets” (some of which are closer to India than others) are in economic trouble. Because of this, FIIs are pulling their money out of these markets. Since October 2021, this has been the case with India. Still, India is better off than other countries in the same situation when it comes to inflation. This is one of the most optimistic signs for investors.

    Using Investor Awareness to Trade on the Stock Market

    Why is India a good market for investments, even if they are in the stock market? For one thing, India’s economy is back on track after all the problems of the past few years. The services sector, which has been slowing down for the past few years, is also showing signs of getting back on its feet. Also, the amount of debt owed to countries outside of Canada is low, and the country has enough foreign exchange reserves to cover CAD projections and debt payments to countries outside of Canada. In this situation, investors who buy stocks need to be careful, because investing in the markets is risky. Investors who want to open a Demat account and invest in stocks that will do well during times of inflation should keep in mind the following:

    Investors should be ready for more volatility for the next 6 to 9 months.

    Investors shouldn’t expect big returns and shouldn’t think that the returns of the last two years will happen again.
    If an investor wants to invest a large sum all at once, they can choose funds that have a balanced mix of debt and stocks.
    Hybrid funds are a good choice for investors who like to play it safe.
    Using an STP or SIP, you should spread out your investments in small and mid-cap stocks over the next 6 to 9 months.

    A Time to Invest Carefully

    You might be interested in investing in the stock market because there are a lot of IPOs coming up. It’s easy to open a Demat account and start investing with Zebu, but if you do so now, you must do your research on stocks and invest carefully.

    If you planning to invest in the stock market then you should definitely try Zebu’s online trading platform which will help you manage your trading seamlessly. At Zebu, a share broker firm we also understand that online brokerage is a major problem, hence offer the lowest brokerage options to our customers

  • How Exactly Does Inflation Affect The Market?

    Most of the time, we think of inflation as a bad thing for stock markets. It’s not hard to figure out why. When inflation is high, the cost of living goes up and people have less money to spend. When inflation goes up, people earn less in real terms, and when inflation is taken into account, this means that their returns are lower. Second, when inflation goes up, interest rates go up, which also raises the cost of equity. There are also times when the effect of inflation on the stock market is seen as a good thing. So, what does inflation mean for the Indian stock market? Does inflation have anything to do with investments? When inflation goes up, do people tend to invest more or less? Most importantly, how does inflation affect the indices of the stock market, especially the Nifty and the Sensex?

     Let’s look in more depth at each of these points. As one of the biggest share broker companies Zebu has a huge team working to make your trading and investment journey as seamless as possible in our efforts to do that we offer the best trading accounts with lowest brokerage for every trade you make.

    1. How inflation affects the amount of money investors can spend What does it mean for prices to go up? Inflation is when the prices of goods and services go up over and over again. In India, the CPI inflation and the WPI inflation are used to measure both retail inflation and producer inflation. Usually, the CPI is a better way to measure consumer inflation because it is more accurate and has more to do with buying power. As inflation goes up, the value of the money you will get in the future goes down. That’s what the “present value” of money means. When inflation is 5%, your Rs.100 receivable from a year from now is worth Rs.95 today. When inflation is 10%, your Rs.100 receivable from a year from now is only worth Rs.90 today. With the same amount of money, you can buy less when your purchasing power goes down. This is usually bad for consumer-driven stocks like FMCG and consumer durables because people’s ability to pay goes down. This means that these companies will have to lower prices and make less money.

    2. Inflation affects interest rates, which in turn affects prices. What happens to bonds and stocks when the inflation rate goes up? Let’s start with bonds. When the rate of inflation goes up, so do interest rates or bond yields. We’ve seen this happen in the last six months, when inflation expectations have gone up and bond yields have gone up sharply by 125 basis points. So that the Yield To Maturity or total rate of return of these bonds stays about the same, when bond yields go up, bond prices will go down. When the price of a bond goes down, people who own bonds, like banks and people with mutual funds, lose money. This is why banks tend to lose money when interest rates go up.

    How about stocks? When both inflation and interest rates go up, the cost of capital goes up as well. The cost of capital is the sum of the costs of equity and debt. And when bond yields go up, the cost of running a business goes up. This means that the company’s future cash flows will be worth less. We know that future cash flows are taken into account when figuring out how much a stock is worth. When the rate of discounting goes up, it makes sense that the value of an equity will go down. In a strange way, higher inflation is good for stocks in the medium to long term. Even though inflation may be bad for bonds and stocks in theory, we can’t forget that it also has a good side. Usually, rising inflation means that GDP growth is getting better.


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    Even in the US and Japan, the big economic battle is all about getting inflation back to the 2% level. That is thought to be the level where growth will start to happen. In fact, if you look at the growth of the world and even India over the last 20 years, the GDP has never grown significantly when inflation was low. Even though ridiculously high inflation can make it hard to buy things, a certain level of inflation is needed to encourage businesses and producers. So the real problem is inflation which gets too high. At Zebu, we have a huge team working to make your trading and investment journey as seamless as possible in our efforts to do that, we offer the best trading accounts with lowest brokerage for every trade you make.