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Started by : Sandip Gunjal, Sr. Associate, Irevna   12 08 2008 10:30:01 +0000
Industry : Equity Research/AnalyticsFunctional Area : Equities(Markets)
Activity:  41 views;  last activity : 07 06 2010 20:18:09 +0000

With share prices making headlines now a days, I am wondering what effect will it have on a normal average consumer when the share price falls??? Should he/she worry about it?? How does Stock market affect the economy ??

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1 2 3 4
1 Share market_Barometer of Economy
2 Wealth
3 Leading indicator and risk meassure
4 change in share price

Share market_Barometer of Economy

idea posted by Dushyant Hada Territory Manager

Ups and down of share amarket is just reflection of economy and when its happen a normal consumer definately effected.

by Esha Johar, Risk Analyst, Irevna  | 09 01 2009 13:54:18 +0000

I agree with Mr. Dushyant. Indeed, the movement of share market decides the movements of incoming and outgoing wealth of the country which effects each and every citizen...

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idea posted by Sandip Gunjal Sr. Associate, Irevna
The decrease in share price will have an impact on the wealth of the investor. If the stock market falls, it will affect their financial outlook as they have lost their money on the shares they have invested. Due to this they will hesitate to spend money which will lead to fall in the consumer spending.
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Leading indicator and risk meassure

idea posted by Mathew Cherian Research Associate/Analyst, Western Michigan University

Stock market is a leading indicator or how the economy is doing. When it goes up it means that the Investment climate of the Economy is good and expectations for future is positive and people save more through this market.

When it is going down the default rate of debt goes up and companies will be hard pressed to raise debt. Also the opposite of the above.

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change in share price

idea posted by Deepika Malik Associate, HDFC Bank

When company goes for an IPO, people buy those shares which can be sold later on. When company starts making profits more people invest in the shares of that company and the price of shares goes up. If the stock holders sell the share when he made a reasonable amount of profit.

The money he earned will be used to purchase good or services and other commodities which will increase the demand of such commodity and there by increase jobs.

IF the share price goes down, the investor may sell the shares at a loss and he wont be purchasing any commodity, this will decrease the demand for particular commodity and more and more people may lose there jobs as company is not making profit and going under loss. This cycle may continue and we may see high unemployment rate.

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