Stock prices are influenced by various factors including market sentiment, industry performance, government policies, and company news. Market sentiment, driven by supply and demand, along with herd instinct, can cause significant price volatility. Additionally, economic conditions, company fundamentals, and events such as mergers or layoffs also play crucial roles in determining stock values.

1. Factors that influence stock prices

2. Influences that effect stock prices?
Stock markets are highly volatile and a number of factors cause this
volatility.
The principle factors that affect the stock prices include:
• Market sentiment
• Industry performance
• Government policies
• Company news
• Market Capitalization

3. Influences that effect stock prices?
Stock markets are highly volatile and a number of factors cause
this volatility.
The principle factors that affect the stock prices include:
Market
Sentiment
Market
Capitalization
Government
Policies
Company
New
Industry
Performance

4. Industry
Performance
• Generally, stock performance is determined by the performance of
the industry that the company is into. Stock prices of the companies
in the same industry often move in tandem with each other.
• Once in a while a company also benefits from a bad news for its
competitor, if both the companies are competing for the same
market.

5. Market
Sentiment
• Market sentiments such as supply and demand determine the share
prices. Optimistic investors buy a stock and pessimistic investors who the
stock.
• Stock prices are also driven by ‘’herd instinct’’. In a bull run, if investors
prefer buying a stock then the demand increases and so the price.
Alternatively, when people prefer selling the stock, it increases the supply
of the stock in the market and thereby, prices of the stock declines
resulting in a bear market.

6. Market
Capitalization
• Often a company’s value is determined by its stock prices. The right
way to determine the true-worth of a company is by understanding its
market capitalization.
• Market capitalization can be calculated by multiplying all outstanding
shares by price of a single share.
Current
Share Price
No. of Shares
in Issue
Market
Capitalization
of a Company

7. • Economic and government conditions directly or indirectly affect
stock prices.
• Changes in economic policies, interest rates, inflation, deflation and
fluctuations in global economic conditions such as crude oil prices,
war, and natural calamities too affect stock prices.
• Economic and political shocks such as an act of terrorism can also
make stock prices fall.
Government
Policies

8. Company News
Company fundamentals often decide why certain stocks are more
preferred than the others. Company-specific factors which affect
share prices include:
• Earnings and profits
• Share splits, Dividends and share buy-backs
• Change in management, mergers etc..
• Employee layoffs
• Introducing new product or product recall
Company
News

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