Stock market is dynamic and volatile in nature and can go up and down any time. Below are principle factors that impact stock prices:1)Stock Demat and Supply2)Company Market Capitalization3)Stock’s Earning Per Share4) Market Company NewsKotak Securities is one of India’s leading share broking firm <a href="http://www.kotaksecurities.com/whatweoffer/demataccount.html">offering demat account services</a>, mutual fund & IPO investing service’s along with a research division specializing in Sectoral Research and Company Specific Equity Research. We also provide you latest <a href="http://www.kotaksecurities.com/stock-market-news/equity/1000/equity-market/NSE/ALL/ALL">share market</a> happenings to keep you updated.Express your views on their Facebook Page and Twitter Handle (@KotakSecurities) or you can also visit www.kotaksecurities.com for more information.
Four Principle Factors Affecting Stock Prices
Four Principle Factors Affecting
Are you new to the share market?
• Ever wondered what makes stock prices move the way they do, sometimes even
to the extent of displaying extreme fluctuations?
• Here are four factors that have a major impact on stock prices.
The Stock’s Demand and Supply
• This is probably the most important factor that impacts stock prices.
• If you have an online trading account, you get to look at the volume of shares
bought or sold during the respective trading sessions.
• When you have more people buying a particular commodity and if there is a general
scarcity, it automatically has an impact on the price of the commodity.
• Same thing happens when there are more number of people
buying the share versus the ones who are selling the stock.
• The reverse happens when more people are selling the stock
as against the ones who are buying it.
The Company’s Market Capitalization
• People generally make the mistake of determining the worth of the company by
referring to its share price which is not entirely correct.
• The right way to determine a company’s worth is to understand its market
capitalization which will help one determine the true worth of the company.
• The market capitalization of a company is a key indicator in determining its stock
The Stock’s Earnings Per Share
• Earnings per share simply means the profit a company has made per share.
• The EPS becomes a fairly good indicator to gauge the company’s performance as well
as its present financial status.
• A higher earnings per share is a positive signal that leads to increased buying of the
company’s shares which again has an positive rub off on the company’s share prices.
• The best time to look up EPS related data is when companies release their quarterly
• Mere speculation via news and media reports might cause prices to plunge or even
• Company or industry news that has the potential to either go in favour or against
the company can have a major impact on stock prices.
• It is, however, advisable to stay clear of speculative news the objective of which is
to either break the prices or inflate it for short term gains.
• Access to real time news and information on market
trends & access to super quick online trading has vastly
changed the dynamics of stock market investment.
• Every bit of information needs to be carefully
scrutinized before one chooses to act on the same.
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