How Do Global Indices Impact the Indian Stock Market?
Foreign portfolio investors (FPIs) frequently make choices based on these indexes, causing losses in other markets and influencing foreign capital flow into India
The Indian stock market is impacted by both macroeconomic and microeconomic factors, with macroeconomic variables influencing the entire economy or sectors and microeconomic factors focused on individual stocks. Following globalisation, the Indian stock market has been more connected into the global share market, with changes in Indian indexes reflecting in worldwide indices.
Foreign portfolio investors (FPIs) frequently make choices based on these indexes, causing losses in other markets and influencing foreign capital flow into India. Sectors like IT rely largely on US corporate expenditure and investments, whereas Indian oil firms rely on global Brent Crude prices and their influence.
GIFT Nifty
The transition from SGX Nifty to GIFT Nifty is driven by regulatory considerations, allowing for better oversight and control of Nifty derivatives trading. This aligns with India's broader financial sector development goals, as the designated international finance centre aims to attract global investors and promote financial services development.
GIFT Nifty's Impact On Indian Stock Market
Serves as a benchmark for the Indian stock market, especially during off-market hours. Potentially beneficial addition to the overall ecosystem despite its evolving impact.
Indian VIX
The India VIX (Volatility Index), also known as the Fear Index, is a measure of market fear in Indian markets. It is calculated using the Black and Scholes Model, where volatility is the input and option value is the output.
A sharp rise in VIX indicates increased volatility expectations. It has consistently negative correlation with Nifty levels.
NASDAQ
NASDAQ, a US stock exchange known for its focus on technology and growth-oriented companies, can significantly impact the Indian market. Its performance can influence global investor sentiment towards technology and growth stocks, affecting investor confidence worldwide. The NASDAQ is home to many technology companies with global presence, including in India, and changes in their valuations can have a ripple effect on technology stocks in India.
NASDAQ's Impact on the Indian Stock Market
Foreign institutional investment indirectly impacts Indian markets.
Cross-border investments may affect Indian companies listed on NASDAQ.
The Indian market is influenced by domestic economic conditions, government policies, corporate earnings, and global trends.
FTSE 100
The Indian stock market is influenced by the FTSE 100 due to interconnected global investment strategies and economic ties. While the Indian equity market has shown aggressive growth, outpacing the UK's in market value, fluctuations in the FTSE 100 can impact investor sentiment and capital flows into India.
Brent Crude Oil
Stock markets are highly sensitive to factors like policy announcements, interest rates, exchange rates, and economic stability. Global oil prices are a major factor, with the UK experiencing a bear run due to the Oil Crisis between 1973 and 1974.
Recent events like the virus outbreak's negative derivatives contracts indicate oil prices don't significantly impact stock markets. Some studies suggest oil prices don't affect the entire stock market.
Increased oil prices reduce profit margins and stock prices, while fall in oil prices boosts investor confidence and positively affects stock prices.
