But did you know that changes in interest rates and inflation impact stock market investments as well. Interest rateOne of the factors that affects stock prices is expected earnings which, in turn, is affected by interest rates as companies operate with some borrowings in their balance sheet. Hence, when the interest rate cycle is on an upward trend, equities are unlikely to give high returns. RBI increases interest rates to stem higher-than-expected inflation or rise in prices of goods and services. Other than its influence on interest rate policy, which can impact stock prices, inflationary prices also affect corporate revenues and profit.

Source: Mint September 27, 2018 03:45 UTC