IS THE STOCK INDICES ARE THE REAL INDICATORS OF COUNTRIES FINANCIAL STRENGTHS ???

IS THE STOCK INDICES ARE THE REAL INDICATORS OF COUNTRIES FINANCIAL STRENGTHS ?

  • Do you agree??

    Votes: 0 0.0%

  • not agree ??

    Votes: 1 20.0%

  • partially agreed

    Votes: 3 60.0%

  • totally disagree

    Votes: 1 20.0%
  • Total voters
    5
  • Poll closed .
K

khalidugcnet

New member
In recent time we all are witnessing the greater depression and the economic meltdowns of major banks in the major economies.

Here at this point I just want to raise one question to all reader that is the share indices or the financial indices are the real economic indices of any nation ??

As we seen SENSEX drops 50 % in just 3 months and the economy was booing before the meltdown similar situation in the all over the world.

Why we just consider the stock markets as the indicators of the economy other than the other developments such as social, political and scientific developments of the country ??

We all know India is developing in all sectors including the financial sector.

Do you all agrees for this ???

Please reply
 
Well i feel stock markets show what the investors are feeling about the economy...where it is heading according to them and moreover right now it is more of global sentiments ruling the minds of investors...what is happening in the US or UK has a direct correlation with the developing indices like of China & India.

And moreover it is the inflation and rising food prises affecting the common man and adding fuel to the fire.

But when the sensex was booming few months back to the 20k level we were like India is the next big thing, rapid growth, posting higher GDP growth, increase in forex reserves, lower inflation. So at that time everything was going in common man's favor.

Now the secnario has completely changed. Increse in crude prises, global meltdown, bankruptcy, inflation, lower GDP forecast, decrease in forex reserves, depreciation of rupee, widening fiscal deficit has affected the sentiments of common people and investors.

But yes people do look for indices to judge whether the economy is booming or heading for a slowdown. It is one of the indicators to judge the economy's performance.
 
Stock indices partially indicate the Financial strength of the country since there are various industries that do not fuction in an organized fashion and are still generating revenue!
 
Partially Yes, but its more of a confidence and conviction kind of thing, still not totally correct. Since we tend to overreact. In general terms Just compare price of US MNC's listed on NASDAQ Or Dow & our Bluechips, you'll find we did make excesses of all sorts last Nov 207 till Jan 2008. US stock prices arent sky high as the Indian stocks.

Thats why we react drastically of any news on Wall street. If they go down by 300, Sensex tanks by 600. Nothing fundamentally has really changed for Indian Companies. Yes some alignment with US shall be ther, but did their Stock Markets collapse even after as many years strong Financial Institutions collapsed. Coz v call them matured markets.

Statistically, it said for us US accounts for 70-80% of trade but for them we are just at 2%. So even if the live problems r faced by their economy they can afford to stand tall, whereas we r just reacting, reacting to news.

Had the real problem being our banks Sensex wud hav to b closed by now.
 
stock index is not the real indicator if countries financial condition.
we have to look at gdp for financal condition of company
 
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