Why Stock Prices Fluctuate in the stock market?
Hello guys today we will discuss why stock prices fluctuate, every day stock price fluctuate, you read the stock news every day that Reliance increased 0.7%, Yes bank fall 0.35%, and sometimes these fluctuations are shockingly high like Titan stock price moves +18% in a single trading session.
Why this fluctuation happens? What causes the stock prices to change?
A trader needs to understand the reason behind the fluctuation of stock prices for success in the stock market.
- Why Stock prices fluctuate
- Supply and demand is the reason behind the fluctuation of stock prices.
What is supply and Demand? Stock market
There are two kinds of people in the market.
Supply refers to the number of people who are willing to sell their shares at any price and on the other hand, Demand refers to the total number of people who are willing to buy the stock at any price and known as potential buyers.
If the number of people who are willing to buy the stocks is greater than the number of people who are willing to sell the Stocks at that case the stock price increases on the other hand if the number of people who are willing to sell the stocks is greater than the number of buyers then the stock prices decrease.
So, it is simple to say that price fluctuation in the stock market is due to SUPPLY and DEMAND. Why people like or dislike a stock is a different thing.
The main reason that affects the DEMAND and SUPPLY of a stock
Important news regarding the company:
If there is positive news regarding the company, then the demand increases and when the news is negative demand decreases and people start trying to sell their stocks and when the news is neutral, then people’s behavior is uncertain. Stock market
Strategies and ideas of the Investors:
You would never meet two such Investors who agree on every point regarding a stock every investor has his own thoughts ideas and strategies due to which some will like the Stock and some will unlike the stock which also affects the supply and demand of stocks in the stock market.
The stock market is the market that runs on sentiments and fear and greed are the two most driving forces here when people feel greedy then demand increases and when people feel fearful, they want to sell their stocks and exit, which causes an increase in supply in the stock market.
So, both Greed and Fear cause fluctuation in stock prices in the stock market; however, all the people are not greedy or fearful at the same time. Stock market
Earning of the company:
Earnings are the measures of companies, profitability. And everyone wants to invest in a profitable company that gives good returns stock prices show the future earnings and expectations of a company. Stock market
There are many other factors that are responsible for the fluctuation in the stock market they change on the basis of government policies like new changes, increase in the excise duty, sale taxes and annual budgets, fluctuation in the bank interest rates, involvement of domestic and international institutional investors, fluctuation in the international institutions like Dows Jones of US<DAX in Germany, etc.