Sectoral Impact: How NIFTY AUTO and NIFTY BANK Reflect Sectoral Dynamics in the Economy

Investors must have the capability to manoeuvre the market movements. If you are a potential investor, your decision must not depend on only one company. On the contrary, you must measure the sectoral dynamics before investing your funds.

Certainly, individually monitoring the price movement of every company in a sector is not feasible. Here, the significance of sectoral indices arrives. Each market index, like NIFTY BANK, Infra, Auto, etc., is a cumulative benchmark used to gauge the financial health of that relevant industry.

Each index has its weightage in the stock market. In that regard, the two indomitable indices are NIFTY AUTO and Bank Nifty. They deal with the top most influential stock shares that can leverage the stock market trends.

Looking forward to investing in the sectoral indices? Read this article to gain comprehensive knowledge of these two indexes and their power over the economy. Scroll down for more information.

Nifty Auto And Its Influence On The Economy

This index deals with the top 16 automobile companies. These enterprises deal with automobile and auto components manufacturing and marketing. Let us look at the companies it comprises and their corresponding weight in the index.

The economy and the Nifty Auto market index are two interrelated units. Each has influenced the other based on different events. For instance, events that have dictated the economy for a while, like demonetisation, COVID-19 infestation, budget announcements, etc., have profoundly influenced this Nifty sector.

On the other hand, various corporate events, price hikes of raw materials, policy shifts (replacement with electric cars), etc., influenced the sector to the extent that the overall economy also felt the repercussions. One of the significant instances is the fuel increase, which led to a dip in automobile sales.

Hence, the market sentiments were bearish at those times. However, with the onset of advanced technology and various financial concessions, it could recover its dominance in no time. The market, after that, was bullish, which profoundly affected the Indian economy.

The index is known for its cyclical nature; hence, it easily succumbs to changes in the economic cycles. However, with the present surge of automobiles, the government expects to attain more than $4 trillion economy by the end of 2025.

Investors still should not ignore the potential challenges of the index before investing. You can invest in this index by funding individual shares, ETFs, and mutual fund schemes.

Nifty Bank And Its Influence On The Economy

This is one of the substantial nifty indices that deals with large capitalisation banks and offers maximum liquidity. If you are keen to invest in the banking sector, glance through the 12 sizeable banks this index deals with.

Like any other financial service, this index is directly related to the economy. It is susceptible to economic events like GDP fluctuations, budget announcements, demonetisations, changes in interest rates, etc. These events usually govern the profitability and loss quotient of the banks, which eventually influences the share price.

Similarly, bank policies and alterations in other operations also impact the economy. For instance, a consequential bank suffers from loss due to unpaid loans. This can create quite a stir in the economy. On the other hand, banks provide financial aid to entrepreneurs to flourish and achieve better economic health.

Hence, it can thus be inferred that Bank Nifty is a reliable source for gauging the overall financial health of the Indian economy. Investors must be meticulous while comprehending the market position of the banks to receive an overview of the entire strength of the financial arena.

In Conclusion

The Nifty Auto and Bank Nifty are excellent tools to gauge the financial health of the two appreciable sections of the market. For more information on their performance, you can choose Motilal Oswal's Research 360 to monitor their growth and fall for accurate remodification of your strategies.