Question

How important are stock market indexes in assessing the overall economic condition?

Answer 1

Investors try to predict the future profits of companies which depend on the economy and since they have money on the line they do a pretty good job. However this is not the same as determining the health of an economy any more the a weather forecaster determines the weather.

Answer 2

The stock market is based on investors' feelings about how things are or might become. Feelings are important. If I feel confident that my income will continue uninterrupted, I am more likely to turn loose of my money rather than hanging on to it. But you must also factor in "hard" data like GNP when determining economic health.

Answer 3

STOCK EXCHANGES ALLOVER THE GLOB THAT INCLUDING INDIA ON LY SHOW THE MASS MOBILITY OF FUNDS IN DIRECTIONS THE BULLS PULL THE STOCK CART CAN BE OF DIFFERENT INDUSTRY INTERESTS . HAWKS IN THESE PULLS BY BULLS NAB THE OPPORTUNITY TO MANIPULATE ,SWING ,SWINDLE THE MONEYS TO THEIR ULTIMATE BENEFITS MAY BE POLITICAL ALSO. SO STOCKS CANNOT BE TERMED AS INDICATORS OF ECONOMICAL PROGRESS BUT ECONOMICAL POLITY AS WELL AS INDICATORS OF MOVEMENTS OF VARIOUS CURRENCIES, THEIR INTERNATIONAL IMPORTANCE. OUR RUPEE HAS INTERNATIONAL IMPORTANCE SO FIIs PLAY IN OUR STOCKS TO PULL THE RUPEES IN EXCHANGE OF DOLLARS AND OTHER MAJOR CURRENCIES. SO THIS SWITCHING OF CURRENCIES OF MAJOR DEVELOPING COUNTRIES LIKE INDIA, CHINA, MIDDLE-EAST, SOUTH EAST ASIA HAS BECOME VITAL GAME IN FACE OF GLOBALIZATION. SO YOU CAN CALL STOCKS TO BE BAROMETER OF INTERNATIONAL INTERESTS SWINGS.. SO STOCKS CANNOT DETERMINE THE ECONOMICAL HEALTH OF A NATION TODAY BUT ONLY DETERMINES . DEMAND OF YOUR CURRENCIES IN THE GLOBAL MARKET.