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How does bank interest rate affect the share market ?

Can a rise in interest rate slump the share market and vice versa?

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Question added by Subhranshu Ganguly , Quality Analyst. , WIPRO
Date Posted: 2014/02/07
Fazal Ebrahim Dawood
by Fazal Ebrahim Dawood , Chief Executive Officer , Stardist Ltd

When banks increases bank rates , savings is more attractive with higher interest rates and people tends to save money because of higher interest rates and spending is reduced thus resulting in less buying and less market share  . A reduction in bank rates makes savings less attractive and borrowing more attractive which stimulate spending resulting in increased sales and market share 

Azharuddin Mohammed Khaja
by Azharuddin Mohammed Khaja , FINANCE & ADMINISTRATION EXECUTIVE , AIN CORPORATION SECURITY SOLUTIONS INDIA PVT LTD

Rise in/down fall in bank interest causes a notable affect to the concerned countries share market, as when the bank's increases their interest rates it attracts more amount of savings and ultimately people save more and at the same time people also spend less causing low markets where as if taken vice-versa on reduced interest rates people save less causing high market share.

Swarnendu Ganguly
by Swarnendu Ganguly , Area Sales Manager (AVP) , Indusind Bank Ltd

its the push and pull of currency in the market which controls the purchasing power of an individual. The push and pull of the currency in the market is checked by the government.

mukkur srinivasan varadhan
by mukkur srinivasan varadhan , Chartered Accountant , Chartered Accountant in practice

An increase of interest rate will help the money dearer.So loans already taken will cost more thereby reducing the protability of the companies. When the money becomes dearer, the companies will  go for loans less, resulting in the slump in business .This will reduce the profitability of companies.So share value will go down.When there is decrease in interest rate , vice vetrsa will happen

Arslan Zahid
by Arslan Zahid , Store Assistant , Haji commercial

The interest rate that impacts stocks. The interst rate that moves market is the the federal funds rate. Conversely, when it decreases the federal funds rare the Fed is increasing the money supply and, by making it cheaper to borrow, encouraging spending.

FATEH BOUCHENE
by FATEH BOUCHENE , institut d'emission , banque centrale d'algerie

Changes in interest rates can significantly affect the different types of investments. The price of some stocks may decline as companies that pay more for their borrowings and commodities will make lower profits

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