What causes the stock price to fluctuate?

Podcast Duration: 06:41
Angel One podcast ke iss episode me aapka swagat hai.

Jab aap stock market me invest karne ke baare me sochte hain, the first thing on your minds is that aapko apne paise par achha return milega.

Of course, that is true. There is potential to earn a lot. Lekin stock market me tukke nahi lagte. You need to put a lot of thought when you decide where to invest and trade. Agar aapki investment strategy me kuch bhi kami reh jaati hai, you could also lose all your money! Baat aisi hai ke stock market bahut hi volatile hoti hai. Share prices constantly change hote rehte hain. Aise me agar aapko trade karne ke liye decisions lene hain, toh aapko ye pata hona chahiye ke aakhir ye price fluctuations hoti kyun hain? Once you know the factors behind these fluctuations, then you will be able to make better decisions.

Let us discuss these factors one by one jinki wajah se stock prices girte ya badhte hain. First and foremost there are the forces of demand and supply. Stock market demand aur supply ke forces par chalti hai. Kisi bhi stock ki kitni demand hai aur kitna supply hai - isse pata chalta hai ke ek particular stock ka price kitna hoga.

Jab kisi stock ki demand uske supply se zyada hoti hai, yaani ki jab stock ke buyers uske sellers se zyada hote hain, toh stock price me badhautari hoti hai. Why? Kyuki stock ki demand ka matlab hai ke buyers ke liye stock important hai - toh woh uss stock ko khareedna ke liye apni jeb halki karne ke liye taiyaar hain. On the other end, doosra instance hoga jab ek stock ka supply uske demand se zyada hai. This means that the stock has more sellers than buyers. In simple terms, it means ke sellers uss stock ko bechne ke liye utsuk hain aur vo us stock ko kam price me bhi bechne ke liye ready hain - they just want to get out of that particular stock for some reason.

This is how demand and supply influence the share prices.

Second important factor jo share prices decide karta hai are the fundamentals of the company. Fundamentals se humara matlab hai uss company ke financials. Ek company ki financial performance kaisi hai- iss ka bahut hi bada asar uske stock prices me reflect hota hai. Agar kisi company ke financials weak hain, toh hum uss company par apne paise nahi lagana chahenge. This will mean a downward spiral in the stock price. Aise hi jab investors aur traders ko profit ya long-term wealth generation ka goal fulfil karna hota hai, tab vo unhi companies ke stocks chunte hain jiske financials strong hote hain, financial history steady profits dikhati hai. You see positive performance and you decide to invest. After all, apna paisa doobta koi bhi nahi dekhna chahta.

Next factor hai economy. Kai baar aap investors se baat karein to shayad vo company ko dekhe aur individual stock ke demand aur supply ko dekhein, lekin overall economy ko overlook kar dein. But asal me toh puri economy ki health ka bhi shares ki price movement par asar padta hai. Ek desk ki econonmy kitne healthy hai aur global economy ka kya haal hai- ye sab important sawaal hain ye janne ke liye ke share prices future me kaisa behave karenge. Agar puri national economy hi collapse kar rahi hogi toh kisi ek company ka stock bhi bahut high prices nahi achieve kar lega.

Here’s the deal: stock market me sirf domestic investors nahi hote. There are also Foreign Institutional Investors (FIIs). Agar country ki economy me slowdown hoga toh FIIs se investment nahi ayegi. In fact, agar aisa lag raha ho ke economy aane wale me samay me bhi weak rahegi, toh FIIs apni current shareholdings ko bhi bech kar economy se exit karke kisi stable economy me invest karenge.

Another factor jisse share prices par asar hota hai are the government policies. Agar government koi policy announce karti hai jo investors ke liye favourable hain, toh uss particular industry ya sector ke stock ke prices badhenge. Agar government ne koi unfavourable policy annoucne ki - jaise taxes ka badhna ya us sector me entry par restrictions, then investors will lose faith aur vo us sector se withdraw karke kisi lucrative sector me invest karna chahenge. They will sell their current shareholdings, and usse prices me downward spiral hoga.

Agla factor hai political scenario. Aap soch rahe honge - ke aakhir desk ki politics ka share market se kya lena-dena? Well, lena-dena toh hai. Agar kisi country me political conditions unstable hain, ya phir political leadership ko lekar uncertainty hai, toh usme invest karne se capital ki value girne ka khatra rehta hai. Toh agar koi long-term investment karke apne capital me appreciation chahta hai, then such an investor would stay away from this country and uska matlab hai ki share prices kam ho jaenge.

Finally, ek important factor hai dividend declarations ka. Ek company ne pichle saalon me kitna dividend declare kiya aur shareholders me baanta - ye data public domain me hota hai. Aap company ki annual reports ya financial statements se aasani se pata laga sakte hain ke company kitna dividend declare kar rahi thi. Dividend declare karne par aam taur par company ka stock price aur badh jaata hai.

Kyun? Dividend declare hone se sab prospective investors ek messsage milta hai -that the company is doing well, woh financially strong aur stable hai. So more buyers get together for the shares of the company and uske prices badh jaate hain. On the other hand, agar dividend investors ki expectations se kam hota hai, then prices may fall.

Share prices ko aur bhi kayi factors impact karte hain. Ho sakta hai overall market sentiment hi positive ho yaani ki bullish ho - that would lead to increase in share prices. Agar market sentiment bearish hoga, it is likely that the price of shares will go down and down. As an investor, apna agla trade karne se pehle inn sabhi factors ko dhyan me rakhe aur informed decision lein!

Happy trading!