Factor affecting performance of stock market

Company stocks tend to track with the market and with their sector or industry peers. The goal is increased spending and economic activity.

For more on this, see " Demographic Trends and the Implications for Investment. Changes in economic policy If a new government comes into power, it may decide to make new policies.

But, unfortunately, there is no clean equation that tells us exactly how a stock price will behave. Inflation and Interest Rates One of the more predictable influences of the stock market are periodic adjustments of interest rates by the U.

To learn about present value, see " Understanding the Time Value of Money.

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Market Psychology At the end of the day, swings in the stock market are caused by human beings. Stability of government When there is a stable government, businessmen feel confident to invest in new businesses and expand existing businesses. Equals the money left over after you subtract your costs from the money you made.

But sometimes, the stock price of a company will benefit from a piece of bad news for its competitor if the companies are competing for the same market.

They can often predict whether the market as a whole will go up or down. Deflation Falling prices tend to mean lower profits for companies and decreased economic activity.

There are boom periods in a rising market when everyone wants to buy. We can think of the future earnings stream as a function of both the current level of earnings and the expected growth in this earnings base. The Bottom Line Different types of investors depend on different factors.

Banks tend to decrease the lending rates. Get a free 10 week email series that will teach you how to start investing. However, you may witness an intermittently increased preference for gold and bonds during uncertainties.

A riskier stock earns a higher discount rate, which, in turn, earns a lower multiple. Many of the ideas in behavioral finance confirm observable suspicions: Companies drastically affected are the ones involved in overseas operations.

High inflation has the opposite effect, because it signals that interest rates will be rising in the immediate or near future, thus slowing economic growth. The value of the Canadian dollar Many Canadian companies sell products to buyers in other countries. They would panic and sell their shares.

In non-democratic countries with which we trade, coups, general strikes and revolutions may be more likely.

Factors that can affect stock prices

Investors who believe strongly in fundamentals can reconcile themselves to technical forces with the following popular argument: Alternatively, there are also periods of panic when almost every investor is scrambling to sell.

If companies announce dividends, generally share prices of those companies tend to increase. When the price of the Canadian dollar falls, it makes it cheaper for others to buy our products.

Investors abandon shares of the loss-making company. For example, free cash flow per share is used as an alternative measure of earnings power.

They may lead to changes in inflation and interest rates, which in turn may affect stock prices. Deflationon the other hand, is generally bad for stocks because it signifies a loss in pricing power for companies.

Factors That Affect the Stock Market

A rise or fall depends on expectations of the voters from the government. They, in turn, increase the lending rates.

Under a hawkish stance, RBI raises the key policy rates. More often than not, stock prices are affected by a number of factors and events, some of which influence stock prices directly and others that do so indirectly. In case the company is taken over by a management having a poor reputation then the share prices would fall.

Additionally, political instability, the imposition of embargo, war-like situation, and civil riots may cause the stock prices to go southwards. In case returns offered by markets in other countries are attractive, then institutional investors would sell their securities in order to invest in those markets.

They start offloading the shares of the company which reduces its stock prices. Investor sentiment Investor sentiment or confidence can cause the market to go up or down, which can cause stock prices to rise or fall. This leads to credit expansion. When rupee hardens in respect to other currencies, it sets a multidimensional chain reaction.Important factors influencing share prices The following are the factors that influence share prices 1.

Forces that move stock prices

Demand and supply Demand and supply of securities influence price of securities. 16 Important factors that influence share prices. If the stock market is run in a transparent manner with effective regulation then the investors would.

affecting the stock market may pose severe multicolinearity problem and it becomes difficult to delineate the separate affects of different variables on the stock market movement. Deriving basic factors from such The Effect of Macroeconomic Factors on Indian Stock Market Performance: A Factor Analysis.

Factors affecting the Indian stock market Theoretically, stock prices of a company should fluctuate based on a company’s performance only. But just like in any other field, theories face an immense challenge in the real world of the stock market field as well.

The Effect of Economic Factors on the Performance of the Australian Stock Market A thesis submitted in fulfillment of the requirements for the degree of Doctor of.

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View the performance of your stock and option holdings Fundamental Factors. In an efficient market, stock prices would be determined primarily by fundamentals, which, at the basic level, refer.

Factor affecting performance of stock market
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