SHARETIPSINFO >> Articles Directory >> Impact of oil prices on the stock market
How often you have heard about the stock market, or do have any conscious about it? If not you might not be concern about the economic growth of a country. Some people might be too fluent to know what is stock market, while there are people who don’t know what it is all about. Ok, if you don’t know true role play by it that means you wont have any idea how oil prices will have a deep impact or not on the stock market. Stock market has been practiced during the 11 century in Cairo. In India it came to be known in the year around 1875. There are two types of stock market in India, they are Bombay Stock exchange known as Sensex introduced in 1952 and National Stock Exchange known as Nifty introduced in 1994. Share market is a place where company sells their share to the public. Not every emerging company were listed under this stock market, there are different criteria so only some company can be listed and the Board of Directors of the Stock market regulate the selling and buying of the shares of the different listed companies. So, let us have a look at the impact of oil prices on the stock market.
Factors affecting stock market
Since only all the top companies can be listed in a stock market, their performance greatly affect the economic status .There are some points in which the status of the economy can be e known and this points varies differently within a minute also, for instance last week sensex point was 14,000 but today sensex point was 18,000 before one hour it was 17,200 so this shows that there was increase in the economy. But the main factor which affects the growth of sensex is hardy known by the people, since stock market is formed by the different company.
Everyone knows the importance of oil ,the daily needs is increasing but the production unit cannot be equivalent ,so the prices also varies Oil producing countries and companies having refineries were not in a favor to build more refineries since the consumption is more and more and since it is a non renewable resource, and decline of the production. It is very important that you understand the concept of swing trading.
The prices of oil and the stock market works in opposite direction, with the increase in oil price leads to the decrease of the return in the Indian stock market, likewise decrease in oil prices leads to the increase in the return of Stock market. The great decline of the oil prices is not the major cause of the Stock market clashes. Our profit depends on the share which we are looking for. If the oil prices increase we can switch over to other energy stocks. The most suffering countries in the oil price will be the America. The world oil market is sgold and bought in terms of dollar, so if a country wants to buy she has to change their currency to dollar first.
There can be a great advantage for the investors regarding the oil price increase ,if he buys one barrel of oil for 30 dollar after few months if he price increases to 50 dollar per barrel .So ,it shows that if he sells he will earn a profit of 20 dollar per barrel ,which will be great profit for the investor. Besides it is noted that daily oil consumption will increase and since the largest oil producing countries Saudi Arabia nearly meet its end it might be a great chance to buy shares in this sector.
Lastly increase in oil prices leads in the increase in the transportation cost as well as the heating costs for some elements, which in turns almost affect some of the manufacturing company. So, we have seen the impact of oil prices on the stock market.
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