31676867 Q 4 Factors Affecting Capital Market in India

Factors affecting capital market in India :- The capital market is affected by a range of factors . Some of the factors which influence capital market are as follows:- a)Performance of domestic companies:- The performance of the companies or rather corporate earnings is one of the factors whi ch has dir ect impact or effec t on capital marke t in a countr y. Weak corporate earnings indicate that the demand for goods and services in the economy is less due to slow growth in per capita i ncome of people . Because o f slow growth in demand there is slow growth in employment which me ans slow growth in demand in the near future. Thus weak cor por ate ear nings indicate ave rage or not so good prospects for the economy as a whole in the near term. In such a scenario the investors ( both domestic as well as forei gn ) woul d be wary to invest in the capital market and thus there is bear market like situation. The opposite case o f it would be robust corporate earnings and it’s positive impact on the capital market. The corporate ear nings for the Apr il – June quarter for the curr ent fiscal has been good. The companies like TCS, Infosys,Maruti Suzuki, Bharti Airtel, ACC, ITC, Wi pro,HDFC,Binani cement, IDEA, Mari co Can ara Bank, Pi ramal He al th, Indi a cements , Ultra Tech, L&T, Coca- Cola, Yes Bank, Dr. Reddy’s Laboratories, Oriental Bank of Commer ce, Ranbax y, Forti s, Shree Cemen t ,etc have regis tere d growth in net profit compared to the corresponding quarter a year ago. Thus we see companies fro m Inf rastr ucture sector, Financial Ser vic es, Pharmaceuti cal sec tor , IT Sector, Automobile sector, etc. doing well . This across the sector growth indicates that the Indian economy is on the path of recovery which has been positively reflected in the stock market( rise in sensex & nifty) in the last two weeks. (July 13-July 24). b)Environment al Factors :- Environmental Factor in India’s context primarily means- Monsoon . In India around 60 % of agr icultural prod uct ion is dependent on monso on. Thus ther e is heavy dependence on mo nsoon. T he ma jor chunk of a gric ultur al prod uction comes from the states of Punj ab , Haryana & Uttar Pradesh. Thus de ficient or delaye d monsoon in this part of the country would directly affect the agricultural output in the country. Apart fr om monsoon ot he r natural cala mi ti es li ke Fl oods, tsunami, dr ought, earthquake, etc. also have an impact on the capital market of a country. The Indian Met Department (IMD) on 24 th June stated that India would receive only 93 % rainfall of Long Period Average (LPA). This piece of news directly had an impact on Indian capital market with BSE Sensex falling by 0.5 % on the 25 th June . The major losers were automakers and consumer goods firms since the below normal monsoon forecast triggered concerns that demand in the crucial rural heartland would take a

31676867 Q 4 Factors Affecting Capital Market in India

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