Every commodity depend upon various factors, likewise is stock market. There are many factors affecting share prices. It does not depend upon one or two factors, but some factors directly influence the share prices.
Demand and supply- it is the fundamental rule of economics that hold good for equity market also. Stock market trading directly affects the share price. The price of particular stock increases with increase in the sale of its share. Similarly the price of share decrease with the increase in sale of the share. Though it is difficult to forecast market trend, but it can be decided after an idea from stock holder.
News- news is a big factor affecting stock price. Negative news decreases the future prospects of the company and a positive release increase people interest in buying the shares. Some time, there might be a good news that company price might show small movement. So, the factor that matters more is news. Always use wait and watch policy in the market, if there is no fixed reaction about the stock in the market.
Market Cap- the worth of the company shall not be determined from stock prices, but from market capitalization. It is considered the major mistake to determine company’s worth with stock price. Market cap is calculated by multiplying total number of outstanding stocks in the market with the stock price. Market capitalization, one of the factors affecting share price, is considered the worth of the company.
Earning per share- it is the profit made by the company. This identity is mentioned in every quarter report of the company as it is most important factor affecting share price and helps in determining company’s health. EPS affect buying tendency and causes increase in particular stock price. So for profitable investment, it is always recommended to go through the quarterly reports of the company before deciding to invest in it and short list the possibilities before actually buying the shares of a particular company.
Price/Earning Ratio – also known as P/E ratio. It gives an idea of the share price of the company when compared to its earning. The stock is undervalued, if the price of share is low as compared to company’s earning. The stock is overvalued, if the price of the stock is more than the company’s earning.
Apart from those discussed above, there are many reasons for increase or decrease in price of the share. There are several stock factors affecting share prices. It is always better to take the advice from professional stock trading companies. Be aware of discount coverage advertisements.
Tags: affecting stock price, Earning per share, factors affecting share prices, Price-Earning Ratio
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