InvestorQ : What are the factors that move the stock prices?
Juvina Maggie made post

What are the factors that move the stock prices?

NISHA Nayak answered.
3 years ago

It is hard to pinpoint any single factor that moves the stock price but typically there are 5 distinct factors that move stock prices in the Indian context…

Demand and supply plays a key role in determining the price. Normally greater the demand, prices tend to move up and Greater the supply, prices of the stock tend to get depressed.

Flow of global news and global market cues. The stock market has become a globally integrated place. It is impacted by Trump’s tax policy to French elections to Japanese central bank policy to Chinese steel production. Each of these factors plays a key role in determining stock prices in India.

Industry level factors also impact stock prices. For example if the government supports steel stocks with import quotas then all steel stocks react positively. Similarly, if the government is likely to make the cost of inputs cheaper for the fertilizer industry then all stocks in the fertilizer industry get impacted positively.

Company level factors have a key role in impacting stock prices. If the company’s quarterly results are disappointing, then stock reacts negatively. Similarly, if a company gets major orders from clients then it could be positive. These company level factors are typically news-sensitive and the impact depends on the gravity of the news.

Lastly, there are technical factors that impact stock prices. For example, stocks may simply correct because they are overbought. Alternatively stocks may see a lot of buying interest around the support level or selling pressure around the resistance levels. We also see price impact when the stock price breaches DMAs. These are purely technical.