Sultans of NSE
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Activity:
36 views;
last activity : 07 06 2010 20:18:09 +0000
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Stock price
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Bank Rate / Interest Rate / CRR / Repo Rate
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Lower rate is good for secondary market
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I feel when borrowing from banks become costlier, the company will be spending less on growth and will make less profit. Which will decrease the a amount of cash inflow and which in turn will lower the price of stock.
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Hello.
I completely agree with you.
When the bank rate increases so as the Interest Rates. How does it affects? This makes the Company borrowings costlier which in turn means Low Profitability. Low profitability means Lower Stock prices and Vice - Versa.
However, Due to higher Interest Rates, Inflation in the Economy is controlled. How? This is because both are inversely related. High Interest Rates means Low spending which in turn reduces demand and price of the commodity falls. But this is only one parameter.
Hence according to me there are mix perceptions due to the flow of Interest rates.
I hope i am correct.
Regards
Rahul Gupta.
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Bank rate is the rate at which the banks are charged for borrowing money from RBI. Due to this the money supply is tightened.
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Good explanation Mr.Kumar about the rise and fall of Interest rate. Well coming to the affects of interest rate on stock market. I have say that interest rate do affect the way companies operate financially. >> When the interest rate is high,the company will try to raise funds thought the issue of equity shares rather than bank loans. >> When interest rate is low, the company will go for bank loans rather than equity. |
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