The different factors affecting the share prices
The price of one share of the company is determined by the traders of the marketplace. The price of the share is perceived value of the traders that is affected by different things that include the position of the company and the present economy. The reason for the fluctuations of the share prices is because of the change in the economic conditions and company’s profit and loss. The prices of shares change everyday according to the activities of the share market but buyers and sellers also causes the prices to change. The demand and supply in the market determines how valuable the shares are. If more people want to buy shares then the prices of the shares rises while if people sell shares rather than buying then the price of the shares will fall. Hence the buyers and sellers as well as the demand and supply affect the price of the shares every day.
Share is the representation of the ownership in the company and it is an indication of the worth of the company. Share prices can stay stable for months but it can even fluctuate wildly which is also called as volatility. There are a large number of variables that drive the share prices but the most important factor is earning. Attributable earning us known as the profit of the company after taxes and other deductions like net profit. In an interconnected and borderless world like the stock market, a slightest threat of war or rumor, interest rate hikes or rising oil prices can detonate the reactions on the world market that will eventually react unpredictably.
There are different factors that affect the share prices which includes-
Demand and supply- demand and supply is considered as a fundamental rule of economics that is also applicable in the equity market. The price of the share is directed affected by the trends of the stock market trading and hence if you people are buying a particular share, the price of the share will increase and if they are selling the share then the prices will fall. Therefore it is very important predict the trend of the stock market and this can be achieved with the assistance of your stock broker as he might have a fair idea regarding the trend of the stock market.
Earnings per share- earnings per share are the profit earned by the company on every share in the last quarter. The quarterly report is published by every company as it is mandatory for the company to state the earnings per share of its company. It is considered as an important factor that decides the financial condition of the company and it also influences the buying tendency in market resulting in increase in the share prices. Therefore if you wish to make a profitable investment then you need to look at the quarterly reports of the company and scrutinize the possibilities before you buy shares of any company. You should also follow the latest news about the company when you are intending to purchase its shares.
Comments
Post a Comment