The Effect Of The Stock Market On Investment: A Comparative Study
The stock market trends affect the nature of individual and business investment. When the market is bullish, retail investors pump in more money in the market, increasing the buying activity the market. It leads to higher stock prices and added wealth for equity investors. On the other hand, when the market is bearish, investors get insecure about their money and withdraw from the market. It leads to depleted wealth for equity investors. At such times, investors look for safer investment options like upcoming IPOs , commodities and bonds, which offer assured returns. Business investment also suffers when the stock market plummets. The lending capacity of banks and other financial institutions decreases at such times, making it difficult for businesses to arrange for capital to increase their operations. When the market is on the rise, the investor's wealth and confidence increase. When individuals spend more, business activities increase, leading to higher demand for goods and serv...