What Events Influence the Stock Price in the Stock Market?
Stock prices are volatile. Their trend is decided by a number of factors like the fundamentals of the company, the economy and internal and external factors. Before investing in the Indian stock market all these factors need to be taken into consideration.The share prices move due to a number of obvious reasons. However, there may be many other factors which though do not directly affect the particular share but has a significant impact on the stock market.
Today, no country can operate independently. Every country on the globe is depended on each other. Thus, if there is some event on the international stage, it also has an impact on the Indian stock market. Exchange rates or shifting relations can either cause market panic or boost it.
The economy is directly proportional to the trend of the stock market. A good economy makes the stock market move higher and vice versa. When the economy is good, there are more jobs and there is also rise in sales and revenue of the company which boosts stock price.
News Related to the Company
Any formal announcement made by a company can also affect the stock price of the company. Good news can see the stock prices rising. If there are any layoffs then it may negatively impact the company's share price. An acquisition on the other hand can boost confidence among investors which reflects in the stock price.Any scandals related to the company like insider trading or fraud quickly catches the attention of the investors who then sell their stocks resulting in a fall in the stock price.
If a company announces a launch of a new product, like a new gadget, or if a stock market expert who is followed by the whole country promotes a stock, the stock prices tend to rise.
Elections play a major role in influencing the stock price. If a particle party wins the elections and the investors sense that the party will work towards improving the economy of the country, then the stock market tends to boom.
Natural calamities have a positive impact on the stock market. The effort to rebuild the losses due to the calamity boosts the economy and also the investor?s confidence towards the market.
Demand and Expectations
Sometimes the stock prices increase only on the basis of speculation. There are a lot of expectations from a company and thus people tend to rush in to buy the company stocks. These may have no fundamental back up to reason why there is an increase in the stock price of a particular company. It is a simple theory of demand and supply where when the demand of a particular stock is high it tends to rise and when the demand is low it starts to fall. A lot of analysis goes into deciding on which stock to pick and at what price. Not only the internal factors but the external factors also have to be kept in mind before deciding to buy a particular stock."
War and Terrorism
Terrorism and war tend to have a negative impact on the stock market. Investors fear that the economy of the country will be deeply impacted due to the war and thus they pull out their money from the stock market.
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