InvestorQ : The world economy is fencing towards the financial crash. Do I exit from the market or wait?
Roshni Hegde made post

The world economy is fencing towards the financial crash. Do I exit from the market or wait?

Tanya Mehta answered.
3 years ago

Even I am also feeling that there will be a huge correction in the market. I am finding below points could be the major reasons for the same.

Raising Interest rate and borrowing cost works parallel:

There are several factors that affect crisis in a macro way, but among them, one close factor is the stock market slip. The US Federal Reserve has announced its plan to prevent overheating of the global economy. The government hiked interest rates three times in 2019. Thus, it resulted in pricy borrowings.

Rising in corporate and national debt level:
Averagely, companies and countries have recorded with exceptionally high borrowing. It led to the heavy debt since the past decade. Historically, due to the low-interest-rate borrowings had been in a huge causing imbalance in the debt level.

The record hit by household debt:
US household records reported, a high debt of nearly $13.3 trillion just in the second quarter of 2019. The household debt includes borrowings mainly done for the mortgage, auto, and student loan sectors. Countries like China, The UK, and other countries have shown a higher level of household debt.

The price rise of crude oil:
The rise in crude oil has not only affected India's trade deficit but pumped pressure on the finances of the government, companies, and individuals. Market analysts predict the economic growth to affect and the rise in inflation.

The strategy of strengthening currency:
Due to higher US interest rates value of the dollar has been strengthened. However, it negatively contributed to currency depreciation of several countries like Turkey, India, Brazil. Over this, experts comment about the definite result of the economic crisis.

Election impact on Indian stocks:
Indian stock market had a positive reaction when Mr. Narendra Modi came to power in 2014. The India market took a hike for about four times. Thus, the result of the general election plays an important role. So the result of General Election 2019 will also affect the stock market. As per some experts if Modi-led government again come in power then there will be the correction of max 10 %. Whereas, the same expert expects the market correct by the range of 20-30% if Congress government comes to power.