Influence of Political Turbulence

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Avinasheswar (Querist)
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12 December 2007 How does a political confusion effect the stock market? Please explain it in the context of confusion over the nuclear deal issue between Congress and Left Parties?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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18 December 2007 The stock market price movemvement due to political confusion is on account of the reaction by investors fearing economic instability affecting business and hence the stock prices.

Ankit Dangayach

Ankit Dangayach (Expert)
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22 December 2007 Political stability is very essential for smooth functioning and rapid growth of the economy which effects the market .Every Government has its own policies regarding rates of taxes and various other laws and frequent change in government and its policies creates the environment of confusion among investors and thus negatively affects the sentiments of the foreign investor.Besides this every government have some priority sectors and frequent changes in them effects the investors sentiments. Due to this they(Foreign Investors or FIIs) are not willing to put money in the market where there is instability .Thus during the period of elections or whenever there are indications of fall of government, we generally see rangebound market or some correction.

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