The stock market, also referred as the equity market or share market, is a dynamic financial marketplace where buying and selling of stocks or shares or equity of the listed companies take place. Stocks represent ownership in a company, and by participating in the stock market, investors become shareholders, entitled to a portion of the company’s assets and profits.
The history of stock market is as old as 800 years but The Dutch East India Company became the first publicly traded company in Amsterdam, Netherlands. While Indians stock exchange, Bombay Stock Exchange (BSE) https://www.bseindia.com/ was started by Premchand Roychand in 1875. Later, in 1992, National Stock Exchange (NSE) https://www.nseindia.com/ was also established.
The primary purpose of the stock market is to facilitate the transfer of capital between companies and investors. Companies issue stocks to raise funds for various purposes, such as expansion, research and development, or debt repayment. Investors, in turn, purchase these stocks with the expectation of realizing capital gains and receiving dividends.
The stock market operates through stock exchanges, where buyers and sellers meet to execute trades. Well-known examples of stock exchanges include the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India, as well as global exchanges like the New York Stock Exchange (NYSE) and the London Stock Exchange (LSE).
The Indian stock market holds immense significance in the country’s economic landscape and plays a pivotal role in shaping its financial ecosystem. The performance of the stock market totally depends upon the performance of the country. Here are some key points highlighting the significance of the Indian economy that will boost the stock market and hence its future can also be predicted:
Indian Economic development and growth:
According to World Bank’s latest India development Update (IDU), that despite significant global challenges, India was one of the fastest-growing major economies in FY22/23 at 7.2%. India’s growth rate was the second highest among G20 countries and almost twice the average for emerging market economies. Also the projected growth rate in GDP for FY24 is 6.2% despite the global recession and higher inflation. Apart from its exceptional growth in GDP, China+1 Policy will also benefit the Indian businesses as India is one of the best alternatives of China. Indian Government’s push towards the Make in India, Startup India and Vocal for Local schemes would also become the keys for economic growth in Indian economy.
Indian Demography:
India’s demography has significant implications for its economy. As of the last updated in January 2022, India has a large and diverse population, making it the second-most populous country in the world and very soon to be the largest populous country in the world. A large population size and structure of 1.4 billion Indians, its major youthful population, a large number of labor force, Increasing urbanization, huge growth in consumers, Increasing educational and skill development, good government policies and global competitiveness, etc., are the major factors which are definitely going to contribute in growing Indian economy.
Increasing awareness about investments and savings among Indians:
People are also understanding the importance of stock market and mutual funds due to a very low interest rates on fixed deposits, a very traditional way of saving. People now do understand the value of diversification, buying insurances, alternative sources of incomes, risk and volatility, etc. Technology and accessibility to the market is also one of the main reason to increase the number of retail investors in the Indian stock market.
In India today, still there are just 17% as on 2023 (most of them entered the market after the Covid-19 Pandemic), while in USA the percentage is roughly 61% as of 2023. So, it can easily be predicted that India has huge growth potential in development and so the equity market.
Hence it can be concluded that with strategy and planning investing in Indian stock market can be the best ways for longer. Indian economy is bound to grow, and so the share market. That’s why it can be said that any investor can achieve their long term financial goal with the help of stock market.
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