Lots of factors that affect on the stock market, share prices are also dependent on lots of factors. So, it is hard to point out just 1 or 2 factors that affect the stock’s price. There is still a little factor that is that directly influenced the share prices.
Demand and Supply - This fundamental rule of economics holds good for the equity market as well. The share price is directly affected by the trend of stock market trading. When lots of people are buying a certain stock, the price of that stock rises and when more people are selling the stock, the price of that particular stock falls. Now it is hard to predict the trend of the market but your stock adviser/broker can give you fair idea of the ongoing trend of the market but be careful before you blindly follow the advice.
News - News is surely an enormous factor when it comes to the stock price. Positive news about a company can raise buying interest in the market while a negative press release can ruin the prospect of a stock. Having said that, you must always keep in mind that often times, despite the amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in an unstable market or when there is mixed reaction about a picky stock.
Market Cap - If you are trying to guess the worth of a company for the price of the stock, you are making an enormous mistake. It is the market capitalization of the company, rather than the stock, that is very important when it comes to determining the worth of the company. You need to multiply the stock price with the total number of outstanding stocks in the market to get the market cap of a company and that is the worth of the company.
Earnings Per Share - Earning per share is the profit that the company made per share in the last quarter. It is compulsory for every public company to publish the quarterly report that states the earning per share of the company. This is perhaps the very important factor for deciding the health of any company and they influence the buying tendency in the market resulting in the increase in the price of that particular stock. So, if you want to make a profitable investment, you need to keep watch on the quarterly reports that the companies and scrutinize the possibilities before buying stocks of particular stock.
Price/Earnings Ratio - Price/Earnings ratio or the P/E ratio gives you a fair idea of how a company's share price compared to its earnings. If the price of the share is very much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way very much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point.
Previous to we conclude this discussion on share prices, let me remind you that there are lots of other reasons behind the fall or rise of the share price. Especially there are stock definite factors that also play its part in the price of the stock. So, it is always important that you do your deep research and stock trading on the basis of your research and information that you get from your adviser/broker. To get benefit from the advisory service it is therefore always better from professional stock trading companies rather than get Greed from discount brokerage advertisements that you must be coming across every day.
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