Today we will learn about why stock prices go up and down in stock market. Before reading this article I suggest you to read the following two articles to understand what is stock market?
Want To Know Why Stock Prices Go Up And Down?
Beginners who are new to stock marketing will be thinking why this stock prices go up and down. Who will be changing this prices? Is it companies? or Is it prime minister 🙂 . These are some questions that are moving around their heads.
Today we will examine the reasons for stock price fluctuations. Let me explain you with an example about this.
When stock prices goes up?
For example, you want to buy Bharti Airtel Limited shares @350 ₹. Now Bharti Airtel Limited has got some good news that they are going to increase the network towers. And they are going to reduce the call cost too.
Now people will think that as a good sign to invest in that company. Because expanding their networks and decreasing the call rate means they hope Bharti Airtel Limited will do good business in future too. So people start buying the shares of Bharti Airtel Limited
And the share price goes up when people start buying the shares.
When stock prices goes down?
Now you came to know what causes for stock price to go high. Now lets see how the stock price goes down. We will take the same Bharti Airtel Limited example. Now some news was telecasting in TV that Mukesh Ambani is going to launch their new Telecom Network called JIO. And he announced that “All voice calls are free for life time” & “Internet is free for 3 months”.
After hearing this news people will obviously get attracted to JIO. So people start thinking that it’s time to switch to JIO. As an investor, you will feel that JIO might do well in future and you start selling your Bharti Airtel Limited shares.
Therefore, the share price goes down when people start selling their Bharti Airtel Limited shares.
You might have one more question in your mind. What if there is no news on that day? Will stock price still go up and down?
The answer for this is, it may or may not move. It depends on the company.
There are many reasons that share price can still fluctuate. Some people might need money so they will sell their shares which they hold. Some beginners want to try out the stocks. Some friends recommended buying that particular stock. And some people research about the fundamental analysis of the company and invest in it. We will learn about fundamental analysis in our next article.
So many reasons will be there for the stock price to go up and down. I just mentioned few of them as an example. Hope you understood how the stock price goes up and down in the stock market.
If you have any more queries please feel free to write in comments. Happy to help you.