Which country’s stock market affects NIFTY and how?

It is no secret that we live in a connected world where a small imbalance in one nation hurts other nations or countries as well. This can be attributed to the cross-border investment transaction or mutual trade exchange between these countries. Even economic markets are interconnected with each other. But this is more indirect than it implies. Therefore in this article, we have listed how this influential country mostly impacts the Indian Stock market.

What is Nifty?

Launched on 22nd April of1996, Nifty is a stock market index for the Indian Stock Exchange (NSE) platform. It is owned and governed. Nifty was launched on the and is owned and managed by NSE indices. It exemplifies 50 companies that are some of the biggest companies in India and deduces and puts forward their loaded average to enable investors to understand the performance of the companies in the share or stock market. It is one of India’s two leading stock exchange directories, and the other is BSE SENSEX.

Nifty records and lists the companies based on their final stock market execution or performance and incorporates it into a ranking system that puts the company performing the finest at the top, followed by other companies according to their attained rank. Through these surveys of the top-ranked companies, Nifty indicates to the investors which businesses or companies can perform competently in the future to get help in investing accordingly to earn the maximum profit.

Many factors influence the activity of the Indian stock market. These factors are mainly divided into two parts. They are macroeconomic factors and microeconomic factors. The macroeconomic factors affect the economy as a whole or all existing sectors, along with the individual capital that is impacted by microeconomic factors. In addition, specific variables or factors influence the Indian stock markets over price change, time, or the probability of these circumstances or growth in the economy, specific stocks, or a sector. So, let’s evaluate these macroeconomic factors and how they impact the Indian stock markets. 

Which country affects Nifty the most?

It is a renowned fact that the United States of America has the largest economy in the world. The number suggests 23 trillion dollars in GDP, rising every minute. Therefore, any unfortunate news in the US markets has a notable impact on the rest of the world. This means whatever occurs in the US; its aftermath is felt globally, and not only just in the United States of America. The 2007 International financial crisis is an evident example of how greatly the US financial market impacts the Indian financial market. Here’s how it impacts the Indian stock market.

  • Debt Markets

The debt market is where commercial documents and treasury bonds are marketed. This sector is highly evolved in the United States compared to the Indian Market, which is still in its budding stage. The impact of the Debt Market on the Indian market can be comprehended from the profit or output of bonds. Surging or plunging US Treasury bond yields affect several stock markets, from the US to Asia and Europe. An increase in profit means improved borrowing prices for businesses and companies that have an existence in the US. However, it will hinder their future equity expenditure called Capex schemes which is a red light for many significant investors. This will influence the lowest line of these businesses, contributing to a drop in stock prices and impacting the Indian markets.

  • News Flow

It is one of the main elements in basic stock trading analysis and investments. This news could be of election results, fiscal deficit, GDP growth, COVID-19 relief package, inflation, etc. These events determine the foreign flows by the FIIs of foreign institutional investors, FPIs or foreign portfolio investors (FPIs), etc., which run the share market of India.

  • Forex Rates

Forex rates are the exchange rates at which the currencies of different countries worldwide are traded in the market. The United States Dollar is significantly the most powerful currency in the world, while the Indian currency, Rupee, is considerably weaker. Therefore, if we want to understand the effect of the US market on the Indian market, we need to look at the import and export between both countries. India imports a high proportion of products and services from the United States. Hence, if the value of the US Dollar increases, to pay that cost, then the importing companies will have to spend more Indian Rupee.


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