Why are our markets affected by changes in US policies?
Answers: America is the world's biggest customer for many other countries' exports.
btw, where is "our markets"?
USA is one of the most important consumer of the capital goods and other items, including food items.
It is also a giant producer of such Items the only exception is petroleum products, it cannot produce enough to satisfy its own demand and imports 80% of its consumption of petrolium products from all over the world.
The reason is
1.Most of our IT industries , Textile, Pharmacy and Leather industries are havaing tie up with US industries and Getting contract from them so a small change in their economy reflects in ours...
2. The major FII investor of our markets are CITI GROUP BAKS and DSP MERYLL LYNCH of America .. so when there is a interest rate cut in their banks their investment wil change according to that ... now our markets are run on their Liquidityonly... so it wil go with their economy.. so only their policy changes affects our market
US is the biggest economy plus most of its imports are from world's manufacturing hubs like India and China.
Right now US is facing recession i.e. demands of goods are going down
which means low exports from India &China,
which means low production
which affects our market adversely
this affect is found globally
countries from where we get the raw material are also affected
As we all know that US is biggest business HUB for many of countries.
Most of the export companies of india is dependent on US.
US is having strong tie up with other countries like india , UK etc.
If we wanna that US policies does not give any affect on indian market so for this we have to spread our business amongst whole world.
Hi
I believe that the market had fallen very fast because of FII selling 17%.
Roumer Citi bank made a big loss and going to close the transcation which is not true ... and last but not the least
short selling done by some brokers which makes maket force for free fall.
Jitendra Patel
we follow US culture..same does OUR MARKETS.
our markets support our view of Blindly following US culture
A large part of the Indian s/w industry is being fed by the outsourcing jobs,a bulk of which is from US & presently indian computer industry is the most expected-from, invested-in industries.So if US policies change such as if they decide to stop outsourcing thn a large part of foreign money will be lost by Indian govt.It will also led the computer industry to crumble so severly that it may need a lot of time to makeup again.Hence it will affect our market.
The world invests is US and vice-versa.So if US changes policilies and faces credit expansion (or crunch) the investors (US or the world)will definitely move in (or out ) of markets to make profit on their investments.All these are related as a spider web and no factor is isolated.Their are innumerable reasons why markets are affected by its participants and not only US policies. :-)
U.S.A. is one of the dominating industrial nations in the world,which is reflected by the fact that its currency DOLLAR is the most widely used in international trade.Further,there are reports that the U.S economy was facing sub-prime crises as well as possibility of recession,resulting in deprecation of dollar,fall in financial markets,rising unemployment,default in housing loans,etc,.FIIs have invested in our markets heavily,which resulted our markets to record historical highs.FIIs are forced to withdraw part of their investments.All the above reasons have affected our markets.So,it is doubtless that US policies have a significant on our markets.
Part of the Indian Stock market is driven by the US dollar albeit indirectly. Companies the run the sensex are tied to the US ecomomy. Stock markets run on sentiment so when sensex drops due to the US economy even stocks of companies not dependent on it go down.
Also the stock prices were way above where they should have been something like all the prices were rigged.
Most of the US companies are in the list of top 500 best companies in the world, the policies and procedures made on these companies also affect the worlds economies. since the US economy has been managed to handle world economy for more than a century. Right now the increasing US economic imbalance affecting world economy in negatively and positively as well. since our economy also a member of the world.
Because maximum investment are form us
our Market affect to us policies so how it happened,it happend very earlier,one of the main thing is value of dollar compare to indian rupee is very less,very earlier indians went there and adopt lot of new trends from there so this reason many peoples adopted these trends,people have avalable to purchse us product in indian market with standard price,this is the only main reason to the arrival of us market.
currently america is dominating the market so change in its policies will affect us in some way or the other
Investment is a result of excess income. Those who have excess funds invest in different oppurtunities. The answer to your question has two aspects. I shall try to explain well. Hope u understand...
1. The Us is a developed economy. That means the investment oppurtunities is lesser there as the economy has reached its maximum growth level...lesser new companies are there.and companies need lesser funds from the public. Thus the people with excess funds try to invest elsewhere. Mainly investment comes to India and China.
2. The rate of returns from investing in the Indian Stock Markets is the HIGHEST in the world. So investors even invest just to maximise returns.
Now the change in policy that is the lowering of the money banks have to maintain with the federal bank in the US. THis resulted in more money available in the economy and thus this helped the stock exchanges in India to bounce back as more money was getting pumped into the stock markets in India.
Broadly speaking, USA has economic ties with almost all developed and developing nations, except those who have isolated themselves from forces of economic reforms introduced in 1990s by IMF.
Those Companies who are exporters of goods or services lose when Indian currency appreciate to an extent not predicted while making contracts. Also, a few of the Indian Companies who have invested in companies having good volume of business in USA, when there are fears of recession in USA, following sub-prime crisis, tend to be perceived as weak by the investors, though it may not really be so. To a greater extent, indian economy (though not fully) is not unduly affected by the forces of recession save a few sectors like I.T.
However, the price of a stock in share market varies depending on 12 variables. (You may go through any standard brokering site for detailed information on this). Most of these variables of objective in character, save the 13th variable which is subjective and depends on the investor perception and the ability of the traders to influence this.
So, depending upon the ups and downs of USA markets, the stock market here in India is also affected.
1. Fear of recession in US has affected our market sentiments.
2. Our exports and most of our businesses depend on US.
3. If US is heading towards recession most of our industrial houses may be compelled to search for new economies which may not be readily available.
4. Already the dearer rupee has made an impact on IT based industries.
5. All the above
To understand government policy and markets and its relationship one has to see everything from competitivenee perspective. Each country wants to be competitive in its own way or each country wants enhance its competitive advantage to sustain its competitiveness in the global market. This competitiveness is a resultant of 'six' important determinants of competitiveness, a conceptual model given by Michael Porter, who is also the author of 'world competitiveness report' based on business competitive index. The six factors are: 1. Factor Conditions, 2. Demand Conditions, 3. Related and Supporting Industries, 4. Context for Firm Strategy and Rivalry, 5. Chance and 6. Government Policy. The six factors reinforce each other for higher productivity. After globalization the Demand Factors(point No-2) have been expanded to include local demand and global demand. The pressure of demand from local and global provides the opportunity for the companies to upgrade its products. Government intervention (point No-6) acts like a catalyst for upgrading products and also for higher productivity. American Policies help American Companies and its subsidiaries to exploit global markets and this becomes naturally a competitive disadvantage to non-american countries because non-american countries local demand can be exploited by american subsidiaries in non-american countries. US Policies help American companies as well as American subsidiaries to exploit the demand of non-american countries hence, the affect.
It is because of the relationship of Double Diamond rather than Single Diamond that provides the true competitiveness. If one country changes its policies it naturally affect the demand of another country.
USA is world's number 1 economy.
Indian, chinese and many other markets depends on USA market.
They make profit by US economy by mean of out sourcing and other ways of export-import.
If supar power vibrates than literrally its dependants have effects.
it is just a man made hype
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