[Equity Series]

Session 5: Why Stock Markets Move up or Down?

We are glad to have you with us for our 5th Session on Equity – and that is Why Stock Markets Move Up or Down?

Alright so let’s get started...

Market participation
Why Invest in Equity?
  • Investors actively buy and sell shares of thousands of companies listed on the stock exchange among themselves.

  • The pulse of the market is determined by number of investors willing to buy or sell shares.

  • The pulse of the market helps to ascertain the direction of the market – whether it is in the grip of the bulls or bears i.e. whether it would move upward or downward.

What Affects Stock Prices?

What Affects Stock Prices?

  • Everything else remaining the same, stock prices is affected simply by Demand and supply gap.

  • When there are more buyers chasing a stock, prices move up as potential sellers seek higher prices for giving away their holdings.

  • Conversely When there are more sellers ready to dump stocks, prices move down as potential buyers seek lower prices to accept the dumped stocks.

So in other words, we need to see what affects the demand-supply equation of a stock...

Factors driving demand and supply equations…

Why Invest in Equity?

We live in a dynamic world and thus the demand and supply equations in equity are driven by host of dynamic variables which have bearing on stock prices.
  • The stock markets are primarily driven by host of Macroeconomic factors and Political scenario in the domestic economy…

  • In this era of globalisation, markets are largely affected by what happens outside the domestic economy. Hence geopolitical and Global factors too have bearing on demand and supply equations.

  • Industry and company related underlying factors have high impact on individual stock prices.

  • Moreover, factors that build investment sentiments of an individual such as…Risk appetite and Money supply are also involved.

All these variables put together drives the demand and supply equation in the equity markets, which is reflected in stock prices as well as the overall performance of equity and equity related instruments...

So to end our today’s learning exercise we now invite you to test your learning by taking up this simple quiz

Just Click on the link below