Get free stock market tips, daily stock market tips, share market tips, stock investing tips, daily share market tips, MF investing tips, Mutual FUnds tips, Stock market basics, stock market tutorials, Indian share market tips, BSE closing, SENSEX closing, NIFTY closing, BSE daily rates

Custom Search

Saturday, August 6, 2011

Effect of Inflation on Stock markets

Inflation, as we all know is biggest enemy of investors as well as common man. Inflation has basically has same effect in stock markets as it has in normal day to day life. Actually Inflation and Indian stock markets work hand in hand. If we see definition of inflation : "sharp and persistent rise in prices of commodities every year"

Here are effects of Inflation on stock markets:

Stock markets are effected in same manner by inflation as the economy is for eg, INR 100 in 2010 are equal in purchasing power of INR 91 in 2011 with normal inflation of 9 percent per year. Similar effect is seen in stock markets across the globe.

Investor should also try to understand aspect of inflation prior to investing because inflation can reduce the value of investment returns. Inflation affects all aspects of the economy, from consumer spending, business investment, and employment rates, to government programs, tax policies, and interest rates. Investor can assume that stock investment are still a good hedge against inflation because a company’s revenue and earnings should grow at the same rate as inflation over the time. Hence the stock price keeps on increasing but again the problem comes during recession as it came in 2008 when money is lost in no time. Stock investing is always risky so always invest keeping your fingers crossed and forget about your investment in such turbulent times.


No comments:

Post a Comment


Disclaimer:Stock Market trading involves risk and this website does not warrant or make any representations regarding the use or the results of the materials posted on this website or other sources in terms of their correctness, accuracy, reliability, profit, or otherwise. does not guarantee the accuracy or completeness of any information and is not responsible for any omissions. We clearly state that we have no financial liability whatsoever to any user on account of the use of information provided on the website.
All content within the website is property of and may not be reproduced or duplicated for any reason without the permission of

© Copyrights reserved | for Advertising on this website mail at : for terms and conditions