Shares2Pick.com: What it is for?

What caused the market to crash in June-July?

​

There are several reasons behind the market crash, whether it be Global Inflation, increased Repo Rates, Covid-19 or Conflicts around the world. Let’s discuss the reasons which are causing global market disruption / slowdown.

​

• Inflation: Inflation is meant as a reduction of the monetary value of currency. Thus, when prices of goods, commodities rise rapidly the monetary value of currency decreases.

In the current scenario most of the world markets are witnessing high inflation rates. Commodity prices have risen drastically (Fuel, Coal, Food Items, etc). Thus, there’s a need for money or anything with monetary value to purchase goods, which is eventually leading to global market sell-off. Inflation has hit on all the classes of society.

​

• Hikes in repo rates: Repo rate is charged by the central bank of a country against the commercial banks for the loans or lending-s instituted by the banks. Thus an increased repo rate results in a reduction of lending-s from the banks. Higher repo rates result in high interest rates against the amount lent by the banks, people tend to move away from taking loans at this period of time. This ultimately results in decreased cash flow in the economy.

Currently, the world is facing an increased inflation, thus to control the inflation major economies such as, US, UK, India, etc are using repo rates as a tool to counter increased inflation.

​

• Covid-19: Due to the surge of cases of Covid-19 many countries have again started to lock-down public places, such as, schools, shopping malls, markets, etc, this ultimately resulted in a slow-down of the economy. World manufacturers like China have been hit hard by the impact of Covid-19 lock-down, which resulted in a global economic slow-down.

 

• Global conflicts: Not only the economic slow-down resulted from the impact of inflation or covid-19 lock-down but also the conflicts around the world are largely to blame. The Ukraine-Russia war which began from late February and still continues to this day or civil wars in Myanmar, Afghanistan, Yemen, etc, the world’s economic stability has been largely disrupted by these clashes.

 

(A piece of mind for initial investors: Current financial crisis / slowdown has been hard on all but with the very existence of problems there’s also a way out. Most of the stocks, especially the sectors like chemicals, IT, textile, etc are trending way below their initial quarters support levels. Current financial scenario could be a great opportunity for the initial investors, it could lead to a great fortune in the future.

​

A piece of mind for ace investors: Ace investors are the ones who have been most affected by the ongoing financial crisis. But the current market situation could easily be dealt with a wise investment strategy.)

​