Table of Contents
Introduction to What is Stock Market?
An easy way to think about think about the stock market is to consider it as a network of stock exchanges where traders and investors buy and sell shares of publicly traded companies.
Private companies list shares of their stock on an exchange through a process called an Initial Public Offering (IPO). Investors purchase those shares, which allows the company to raise money from the public to grow its business.
Once the company is listed on a stock exchange it is now a public company and investors can buy and sell the company’s shares on an exchange which tracks the stock price.
The supply and demand helps determine the price for each security at which investors and traders are willing to buy or sell.
How has the General Elections impacted the Market?
The Indian stock market experienced a nosedive on June 4, 2024, following the announcement of the 2024 Lok Sabha election results. Here’s a quick rundown:
The exit polls predicted a strong win for the NDA (National Democratic Alliance) led by Prime Minister Narendra Modi. However the actual vote counting showed a much more competitive race to win.
This uncertainty got the investors cold feet, leading to a significant decline. The Sensex plunged over 6,000 points (over 6.5%) and the Nifty 50 tumbled by more than 1,600 points, marking the worst fall since the beginning of the COVID-19 pandemic in May 2020.
Overall, the 2024 election results caused a major shock to the Indian stock market. It’s still early to say how things will play out, but the coming days and weeks will likely see continued volatility as investors assess the political landscape and its implications for the economy.
How to smartly deal with such risks?
Losing money in the stock market is a frustrating experience, but it’s also a common one. Here are some steps you can take to cope with a loss and move forward:
First, allow yourself to feel the emotions – frustration, anger, disappointment. Bottling them up won’t help. Then, accept what happened. Dwelling on “what ifs” won’t change the situation.
Secondly, Analyze your investment decisions. Were there red flags you missed? Could you have diversified more? Use this as a learning experience to improve your future investment strategies.
Further, you might want to get back into the trading waters immediately to recover the losses. Its better to sit back for a while and analyze what went wrong instead of jumping back in with both feet. It’s better to make a systematic plan on where to put your money, now, and how to distribute it around; instead of putting all your money in one benefitting stock
