Business Cycle Basics: What the Indicators Tell Us

Could you please explain in simple terms how one can identify the stage of the business cycle using the indicators you highlighted in your story from the previous issue? - Sunita Reddy [EasyDNNnews:PaidContentStart]

Editor Responds : Identifying the stage of the business cycle is crucial for making informed investment decisions, and certain economic and market indicators can serve as reliable guides. In early expansion, indicators like rising consumer confidence, improving industrial production, and increasing credit growth signal recovery. Equity markets typically perform well during this phase, especially cyclical sectors like auto and capital goods. As the economy peaks, inflation may rise and central banks often respond with interest rate hikes. Indicators such as declining manufacturing activity and flattening yield curves suggest a slowdown is nearby. During contraction or recession, defensive sectors like FMCG and pharma tend to outperform, while unemployment and bond yields become key metrics to watch. Tracking these indicators over time can help investors align their portfolios with the prevailing macroeconomic environment. Sources like RBI releases, government economic data, and financial platforms provide real-time access to these indicators, enabling timely strategy adjustments across market cycles.

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