5 Factors which will Decide Stock Market Direction

2 min read
In this article, we are going to discuss 5 factors that will decide the direction of the stock market.


The Nifty 50 Index or the BSE Sensex are marking new heights nowadays. But will this momentum continue or there could be some hindrances? Here are the 5 factors that can impact or decide the direction of the stock market in the coming times? How the market will react to it? Let’s discuss this as we move ahead with the article.

5 Factors:

1. The Financial Sector:
  • The Financial Sector constitutes up to 30% to 35% of the Nifty and SENSEX.
  • The impact of the second wave on the books of the financial sector and the disclosures of NPA figures by these institutions will be going to impact the stock market as a whole and its direction.
  • An investor should focus on the number of write-offs, slippages, and provisioning done by a particular financial institution.
2. Inflation data:
  • The focus can be on the numbers of inflation as all the commodities like fuel, agricultural produce or metal have shown a jump in the prices.
  • If this trend continues, then to control the rising prices of the commodities and curb down inflation, RBI will have to take measures.
  • RBI can increase the interest rates which will adversely impact the stock market.
3. Normalcy in the economy:
  • The thing to be noted is that how fast and when the normalcy in the operations will come back in the economy.
  • The faster the economy gets normalize, the better it is for the stock market.
  • It will improve the results, profitability, and margin figures of the companies.
4. Actual numbers of Monsoon:
  • The figures of actual monsoon numbers that happen in India will majorly impact the stock market direction.
  • The percentage of rainfall till now and progressive manner will decide the stock market direction in India.
5. Vaccination Drive:
  • The vaccination drive that is going in the economy will also be playing a good role in deciding the stock market direction.
  • The plan of the Government to completely vaccinate the population by December 2021. Can the Government be able to achieve it?
  • The future impact of 3rd wave or the delta variant will also be considered.


These 5 factors can directly impact the direction of the stock market in the future. All the above-mentioned factors are crucial for setting up the path of the journey of the stock market upwards or downwards. If the figures of these factors fail to stand upon the expectation of market analysts and participants, there could be a notable downfall in the market. Do follow the asset allocation approach at these times, or consult a financial advisor before making any investment decision.

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