10 major factors that impact the stock price variation
You might jump into the stock market and kick start trading by investing in shares on the basis of intuitions, suggestions from the friends and history of a particular stock; but these can’t help you in long run. To become a professional investor and to get assured returns in this highly volatile market, you need to understand the whole algorithm behind the stock price variations.
It will not just help you understand the market trend, but will also help you pick the right share to get profits from the share trading. This also helps investors decide whether they should opt for share trading or MCX trading to maximize their returns.
What are the major factors that impact the stock price variation?
Also Read: How Fundamental Analysis helps you to identify stocks for superior returns?
Demand and Supply
Alike on the other products in the market, demand and supply has strong impact on the stock prices. These two work as strong forces in the economy. Higher the demand more will be the price of any product; conversely lower the supply higher will be the price. The share in which more and more people are interested has high prices, while the share which people want to sell has lower prices.
Market News
Snapdeal is the latest example for the same. Just because of Aamir Khan’s controversial statement, the company has to see millions of app deletion with drastic downfall in the ratings. Why, because he is Snapdeal’s brand ambassador.
Same thing happens with the share prices of the company. The moment any negative news is there about the company, prices fall because of reduced interest from the buyers’ end. Sometimes same news can be positive for a particular set of investors, while others might find it negative and sell their shares. This has high impact on online share trading in India, for the investors can see the live news on their systems and change the decisions immediately.
Institutional Buyers
Demand of shares by just counted buyers cannot impact the share prices. It needs big demand, which can only be made by institutional buyers. Institutions such as mutual funds, pension funds and banks, buy & sell shares in large volume that can drive price up or down.
Company’s Earnings
Profits are the lifeblood of any company, without which a company cannot survive longer. To sustain in the market, it needs to make profits. Experts in the stock market make predictions about the earnings of different companies. Any company that shows better earnings than the predictions sees stock price rise while the companies which perform worse than the expectations lose in terms of reduced share prices.
Economic Conditions
Changing economic conditions have direct impact on the investor sentiment as well as stock price variation. Investors’ confidence grows when there is economic boom and result in bullish market with rapid price rise. Conversely, the prices of shares fall when economic recession is there. Even this has equal impact on online commodity trading, holding the investors back from making transactions.
Industry Performance
Besides the news about the company, news about the competitors and the industry also impact stock prices. A company might see price rise just because of negative news about the competitors.
Other factors
Some other factors that affect stock price variation in the share market include:
- Launch of new product
- Dividend declaration
- Merger and acquisition
- Change in the management
- Any worthy contract
Also Read: Ways to identify multibagger Stocks for short term to medium term investment
How Brokerage Firms Can Help You With Stock Selection?
Though there is ample news on the internet to pick the right share to strengthen your portfolio, leading discount brokers like My Value Trade, Zerodha, RKSV, Easy trade etc. can help you by providing the updated prices and market trends on their live trading portal. The companies further help investors save money by offering the cheapest brokerage plans in India.
Take advantage in the market by buying shares when the price goes down and selling it when it rises. Most of the investors and traders wait for the prices to go up, which is not the right time to buy.
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This is guest post from Anuj Sharma, a part time blogger in India. You can leave a comment / query and he would be glad to respond to any query on this article
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You have described it in a very simple and easy way that how it works and what are the things that we need to keep in mind. Thanks for sharing this information about Stock. Subscribed your blog.
Thank you Riya
Hi Suresh..
Ur blog is very informative. I want to do a diploma course in security analysis. Pls advise a good course.
Regards
Ravi