Volatility in Indian stock Market: Reasons and Future

The Indian stock market is volatile due to Covid pandemic, rising oil prices, inflation, and Russia-Ukraine conflict. It is likely to continue in the coming weeks.

Concerned about the current volatility in Indian stock Market

India has been among the best-performing stock markets since the 21st century. All this has changed since the outbreak of the Covid pandemic. The Indian stocks are now marred by volatility. The situation has become worse with the Russian invasion of Ukraine. So, what can investors expect in the next few weeks? Worry not as we will explain it all to you, including the reasons behind the current crisis.

What is causing this market volatility?

The Indian stock market is being affected by global factors. One of the biggest factors was the Covid pandemic in 2020. The pandemic has been significant in introducing instability in the stock markets, not just in India but all over the world. Although the pandemic has now largely subsided, its effects continue to remain. It’s truly a matter of time for the economy to come out from the clutches of the pandemic effect. 

Rising oil prices over the years have also contributed to the increasing volatility of the Indian stock market. India still depends on crude oil imports for its massive energy requirements. As such, high oil prices are detrimental to the Indian economy and stock market.  

Inflation continues to haunt the Indian economy. Therefore, the purchasing power of the people has significantly declined. Naturally, this has a direct negative effect on the Indian stock market. 

Finally, the ongoing war between Russia and Ukraine has been bad for the global stock market. Consequently, the Indian stock market has also been adversely affected by it. The war has made it very difficult for the Reserve Bank of India to control inflation. 

What to Expect in Future

This kind of volatility and inflation is likely to continue in the next few weeks. There is little hope for improvement in the coming weeks. This is according to the economist Dilip Bhat. He says that this trend is likely to continue over the next two to three quarters. 

According to economist Amnish Aggarwal, Indian IT companies will continue to perform strongly in the future. His recommendation is to target midcap to large-scale IT companies for stock investment. As such, this is one sector in the stock market worth investing in the coming weeks. Amnish Aggarwal advises to consider organizations whose stocks are already undergoing meaningful correction.

Disclaimer: This article is meant for general financial purposes only. You must not take it as any form of legal or taxation or investment or insurance advice. You must seek separate independent advice when indulging in financial decision-making.

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