I just want to know in what basis prices of a company shares increase(or)decrease. for ex: reliance petrol increase 20Rs one day and decrease 10Rs .I just want to know the reason up and down
2007-06-20 04:47:53 · 7 answers · asked by Praveen Raj S 1 in Business & Finance ➔ Investing
The line of logic goes something like this:
1) New information about a company is released. This news may be favorable (e.g. increased profits last quarter, a new product has been revealed, a merger) or unfavorable (e.g. a law suit, higher interest rates make it hard for the company to borrow, poor sales last year). Investors will now re-evaluate the company based on this news.
2) If investors feel this may lead to higher future dividends (from favorably news), the perceived value of the stock goes up. This is because a stock's value is its estimated future dividends. If investors feel this may lead to lower dividends, the perceived value of the stock goes down.
3) Investors change their demand for the stock based on the above steps. Investors want stocks that are more valuable, and don't want stocks that are less valuable. Since there is a limited supply of stocks, this change in the demand-supply equation pushes up or down the price of the stock.
News --> Estimation of future dividends --> Demand for the stock --> Price of the stock
Chapter 16 of my book explains more. Download it for free at http://www.invest-for-retirement.com
2007-06-20 05:15:29 · answer #1 · answered by derobake 4 · 0⤊ 0⤋
Your question is very specific. It relates to day to day movement of stocks.
The movement is based on demand and supply.
If the number of buys exceeds the number of sells at a particular level or a tick the share price will move upwards till an equilibrium point is reached and vice versa.
This process of price discovery will generally go on till the close of the days trading.
When inspite of close an equilibrium point is not reached then normally the next trading day opens with a gap either upward or down ward till the equilibium point is reached.
When equilibrium points are reached you will often find stocks trading in a certain range.
Emotions play a very important role in the demand and supply equation.
Fear drives the prices lower and greed speeds it higher.
In other words the net of longs over shorts means the prices move up and the net of shorts over longs will move the prices lower.
Fundementals and techicals have no significance in day to day price movements only demand and supply.
2007-06-20 08:06:51 · answer #2 · answered by Rej 2 · 0⤊ 0⤋
Share prices are dependent on demand and supply princple. Higher the demand for a particular share on a given day the higher the price rise. Lower demand means lower price.
Demand in dependent on various factors which may be favourable or adverse for the company leading to price fluctations
2007-06-20 05:39:10 · answer #3 · answered by vikas 2 · 0⤊ 0⤋
it is all approximately person-friendly call for and supply... in case you prefer something greater effective than the different guy next to you, you would be keen to pay greater for it than that different guy and as a result the upward push in cost. comparable with decline. in case you quite do no longer want what you have, you will drop the asking cost decrease and decrease till somebody is keen to purchase it from you and as a result the decline in cost. yet you may desire to endure in ideas that there are diverse aspects that impact the call for and supply
2016-11-07 00:54:02 · answer #4 · answered by ? 4 · 0⤊ 0⤋
The share price depends on what someone is willing to pay for it. Sometimes that's based on fundamental values, but far from always.
2007-06-20 04:56:49 · answer #5 · answered by Judy 7 · 0⤊ 0⤋
demand and supply for the company's share depending ont different people future and current perspective of the corporation.
2007-06-20 04:53:16 · answer #6 · answered by laughingbunty 1 · 0⤊ 0⤋
It's due to market situation
2007-06-20 04:53:33 · answer #7 · answered by mohan r 2 · 0⤊ 0⤋