Figuring out where the stocks are going through indicators is fairly easy for investors. As far as new investors are concerned, there is stock market beginner’s guide to help them through. Still, in order to be able to predict the economy, stock market indicators come really handy.
US dollar and its movement are useful in indicating the direction of the stocks. As a general rule, when US dollar goes down, asset class goes up and when Dollars appreciates in value, the stocks collapse. It has been observed time and again and the relation is fairly simple. The bond yield rule is pretty simple as well – whenever the yields go up, it reflects that the economy is recuperating and the stock markets do better do. When opposite is the case, it will be profitable to take out the money from the market.
Indiaspecific indicators are also helpful in determining the healthy of the economy. These include Rail Freight Index and Credit Growth. All the goods in the country is transported through railways and it is thus a great way to know the local economic activity. If there has not been much growth in the rail fright index, it will be safe to say that industrial activity is on the down low. On the other hand, credit growth is used as an indication to know whether or not the banks are keen on lending.
The monthly bulletin from Reserve Bank of India covers various stock market indicators and anyone interested in learning how everything works should definitely read it.Google+