From Bull Runs to Bear Hugs: Stock Market Insights

Over the last ten years, the total capitalisation of stock markets worldwide has surged from $4.7 trillion to $15.2 trillion, respectively. The developing countries’ share of this total bounced from less than 4 per cent to 13 per cent. This increase is equipped by liberalising stock markets, especially in developing countries like India, as per the Stock Market Development and Corporate Finance Decisions report. One thing is clear: the growth of the equity market in developing countries has gained immense support from policymakers and extended the financing options available to them. 

Capital is foremost in running any business, giving businessmen an edge in investing in the stock market. The stock market is highly volatile, and uncertainty of risk and profit has always been at the forefront. According to the article published by Groww, factors like economic conditions, geopolitical events, and market sentiments contribute to market risk, making it difficult for corporate leaders to make sound and strategic investment decisions. As per ScienceDirect, corporate investment decisions are an area of interest to many researchers. Today, investors look for quantitative and qualitative information as it affects stock returns. Similarly, individual investment decisions are affected by economic factors, and the effects of the stock market on corporate financing decision-making are ambiguous. 

According to various studies, the stock market serves a significant function for corporations by diversifying risks, curbing conflicts of interest among creditors, and improving information flow and corporate governance. Corporate investment decisions are affected by a myriad of intertwined factors. Corporate leaders must learn to navigate the complex landscape of the stock market, which is equipped with risks. A more informed corporate investment decision can be made in the long run by staying up to date with economic shifts, technological advancements, government policies, and the ebbs and flow of investment. In developing countries like India, the stock market plays a huge role in corporate decision-making as a large amount of investment flows from here into the corporate world.

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