How to Invest in the Good News and Bad News of the Stock Market

Stock markets are considered one of the most preferred ways that people use to invest their money. It is not a new thing that stock markets get affected by fluctuations easily. The market ups and downs govern the overall scenario of the stock market. If you are an investor or just interested to gain some accurate information about the stock markets then you are at the right destination. In this article, we have discussed how the stock markets are affected by the good news and bad news of the market. Before moving further one should have a basic idea about the pricing in the stock markets so let us have a look at that. If a large number of people are interested to purchase a particular stock then its market price will increase. Whereas if more people are trying to sell the stock the market price will fall. One should note that the relationship existing between stock prices and news is highly dependent on each other. Recently the Union Budget for the year 2023-24 was announced and it can be a piece of good news for all the stock market investors. There are several implications made in the budget that can impact the stock markets in a positive way. Detailed information related to the correlation between the stock markets and the union budget is given below.

How can news affect the entire market? 

News or pieces of digital information has the power to affect the entire stock market. It sounds false but yes it is true. The news flashes on the screen of wall street and investors decide the fate of stock market pricing. Let us take an example to understand the situation in detail. For example, Microsoft reports a hefty increase in earnings over the entire year. Now this will be good news. But if the stock markets are seeing even more increase in earnings then the stock price will eventually fall. The traders or investors may buy the stocks in the hope that prices may increase as the sales go up but if there is a fall in the technology sector then the prices will again go down. This is how anticipations and news can affect the stock markets and cause gains or losses depending on it.Good news or the bad news: The new anticipation tools? In a market where both good and bad news can equally affect the stock market prices it becomes an essential part of it. There is a high chance that a piece of negative news can cause people to sell their stocks whereas a positive one can promote the buying of the stocks. Good earnings data can help individuals to make decisions for their financial security. For example, an announcement of new services and products in the market and other positive economic indicators will develop the overall image of the company in the market. Hence a large number of investors are interested in investing in their stocks. According to certain specific Wall Street traders and their investors, it is stated that news should never be taken as a focal point to make decisions. Yes, they can be used as anticipation tools to plan further options ahead and follow the market areas. Hence good investors will always use the news for anticipation to make firm financial decisions.

Can bad news be a positive one for the stock markets? 

There is a popular opinion that bad news for certain specific stocks can be good for others. Let us take an example to understand it. For example; If there is news that a natural calamity such as a landslide or a hurricane has caused a decline in the price of utility stocks, the anticipation of the emergency repairs and costs may increase. Now depending upon the severity of the situation, the insurance stocks will take up their decisions. On the contrary, the stocks of home management or improvement companies will raise the hopes for high sales and land over the months or a period of time after analyzing the situation.

How can I anticipate the news? 

Being an investor it is necessary that you should have enough skill and experience to anticipate the news. There are many professional traders who spend the majority of their time anticipating the news so that they can make informed financial decisions. Traders use the news as a source of information to anticipate the correct piece of news. Let us have a look at them: 

• Market gossip

There are many business reports and news that state that a company's revenue or sales are of a certain specific number according to the ‘whisper number’. In the absence or deficiency of credible resources, most people try to make decisions regarding finances based on the gossip available in the market. This may sound unreal but yes it is true that something like 'business gossip’ and ‘whisper numbers’ can also affect the news of the stock markets. 

• Company and industry-related news: 

According to several leading news portals the issuing of immediate news about the activities of the company is considered a credible resource of information. There are many investors and traders who with time have started choosing the factors that can offer them news which is related to industry and areas on the spot. So this led to the consumption of the industry and company-related news. 

• Economic reports: 

The economic reports issued by the government authorities act as a credible source of information that can help investors. They can suggest and offer the exact number of consumers and sales that a company is having in the financial year. According to the research, it is found to make the entire process of market anticipation accurate. Government agencies use lagging and leading indicators to give the correct piece of information to the users.

Being an investor, should I change my decisions according to unexpected news? 

There are certain specific events that are sudden and can be anticipated. So being an investor you should be ready to deal with them. For example, a sudden hike in oil prices, drought or any other event can affect stock prices. Hence it is advised that being an investor you should look for possibilities in the market and make decisions according to them. Taking sudden decisions is not recommended so you should research the market fluctuations properly.

What should I expect from the Union Budget for the year 2023 - 24 as a stock market investor?

As a stock market investor or an individual who is trying to gain information on the topic, you should focus on the three major factors. These factors are discussed below for your clarity.

• There will be a major emphasis on fiscal consolidation: 

As it is the last budget before the elections of 2024 so being an investor you must be wondering what implications will the new budgets have on current and future investments. The main target of the government authorities is to drop the fiscal deficit to at least 4.5% of the GDP by the year 2026. In addition, the alarming situations hinting towards a global recession, the overall markets and investors should closely evaluate the performance of the government in meeting the desired targets.

• A balance should be maintained between the disinvestment and subsidies: 

The major policies of the government bodies will try to focus on the areas through which they can strike a balance between the various sectors.

• Focus on the rural economy: 

There will be an introduction to our policies and changes will be made to the existing ones through which the government can focus more on the rural economies. The government has planned to continue the increase of capital expenditure from 2.9% of the GDP to 3.5% of the GDP approximately. Being investors one should understand that the sectors and industries that will have more support from the government will see more success and growth. As per the anticipations, the Union Budget will draw more focus on the manufacturing, technology, chemicals, defense, pharma, healthcare and energy sectors. In addition, the main focus of the authorities will be to review domestic manufacturing through the PIL schemes for the labor working sectors. Industries like public sector banks, defense, capital goods and manufacturing will receive new investments for better growth in the coming future.

Conclusion

Now that you have a fair share of information on how news affects the entire stock market you can make informed decisions according to it. So what are you waiting for? Open a free demat account today with Samco Securities and start your trading journey now. See your anticipation tools and make great financial decisions today to achieve success.