7 Short Term Threats to Stock Market

The stock market is unpredictable and subject to change. You cannot correctly estimate the outcome every time. However, you can access the situation and be aware of certain threats or issues that may hinder your progress. Here are seven short term threats to the stock market:

Indian stock market is driven by the FII more than the domestic investors. FII's are big players, and any inherent steps undertaken by them can create quite a ripple effect in the stock market. Anytime FII investment increases, the share prices tend to rally and vice versa.

Investors are booking profits more than ever at present. FII’s are on a spree at this moment. This may either be them exiting the market or simply regular profit booking on investment. This current profit booking cycle is completely unpredictable.

This is one of the biggest threats hovering around in the Indian stock market . With the US GDP contracting by 0.7% last time, the Fed hike is looming over. This may well mean that returns in the markets will be different in two nations, and any big plays with their hands into both of these markets may hamper their profit booking.

Although the vaccines have been rolled out, the pandemic isn't completely over as of now. Many international markets are going into lockdown mode, and this may end up causing the stock market a dent in the short term.

One of the major giveaways in the stock market is short-term emotions. Even if you are a long-term investor, emotions can sometimes drive you into making decisions that do not match your investing objective.

Any changes in the tax regime are one of the major stock market threats around. Since taxability is out of the hands of investors and industries alike, it’s always a waiting game to see if the changes in the tax regime create a positive outlook or drive away investment.

Companies and industries are bound to be affected by any social or political situations arising in the national and international markets. Elections can often create quite an effect in the stock market, with the Sensex or Nifty behaving differently in the aftermath of the election than normal days.There are plenty of short-term threats to the stock market, and as an investor, being aware of these can help decision-making later on. More importantly, invest for the long-term to ride through most of these temporary waves.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.