Hi, all are you
new to the stock market then I think you have a confusion about why do share
price fluctuates ups and downs? You should need to know about why price
fluctuates what are the reasons, am clearly explains about why the share price
fluctuates as follow
There are an
only one things to know about why the price rise and falls because of demand
and supply, every day we see the market movements it continuously fluctuates,
because of supply and demand of the company share,
Supply and
demand determine the share price of a company if more people interested to buy
a share on a so-on-so company the demand increases then automatically the share
price rises if more people use to sell the shares of a company the supply
increases the demand decreases then automatically share price falls
But they have
some reasons to why supply and demand changes because there are many reasons
behind every share like traders emotion, company financial condition, any other
factors, will be applicable for to that.
I hope this
article may help you, I give a basic overview of why share price fluctuates.
They have some reasons below
Major reasons
for fluctuation:
- Company related factor :
When the share
price goes up’s and down’s are related to company factors, important news
regarding the company as positive and negative it will affect the share price,
and company financial situation also effects on the share price
Because if the
company financial situation play a crucial role in determines the share price
it defines the revenue and expenditures, company profitability, the company
growing levels in future etc…
When the news
regarding positive about the company more number of peoples will show interest
to buy the share if the news regarding about company in negative people will
not interested to buy the share when the news is neutral people will uncertain.
And the company announces to start a new venture and mergers, acquisition.
- Government related factors:
There are various
factors effects on share price when a government changes policies, interest
rates, new schemes, increases tax rates etc…and inflation will be affected and
it affected by national and international political and economic issues,
changing the government…
- Psychology of traders and
investors :
Mainly stock
market runs on emotions and sentiments of traders and investors, the investment
decision is impacted in two things fear and greed if the fear starts people
will sell the shares and decreases the share price, and if greed will take on
hold to booking profits in a profitable manner.
There are some
more reasons behind the share price fluctuation. but this is the main reasons
applicable.
Why demand
increases (share price goes up):
- When news regarding the company in
a positive manner (reports, reduce debts etc...)
- Strong financial situation(
increase revenue, profits, sales growth)
- Announce a new venture and new
reforms in company policies
Why supply
increase:
- When news regarding negative about
a company
- Poor financial strength and high
debt
- Low financial situation (decreases
revenue, sales growth)
There are more
number of great philosophers and investors tell it’s not easy to predict the
share price, its only depends on market sentiments and the financial situation
of a company…
Hope it helpful
….
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