The stock market is basically a multifaceted, unified system that comprises of big as well as small investors who make uncoordinated choices in regard to several forms of investments. We need to understand first that ‘the stock market’ we refer to is not a living object. In fact, it is just an amalgamation for the shared values of respective firms. This is the main reason why it is challenging to pick one specific factor that independently drives the entire stock market. CyberMentors Bitcoin Code Robot review
However, to understand things in simple terms, the first point to accept here is that the value of respective stocks is understood on the basis of the current supply and demand status in the market. The amount of shares issued by a company decides regarding the supply of stocks. When it comes to demand, that is created by the individuals who wish to purchase those particular shares from stockholders who own them. So, the amount for that stock will keep increasing depending on the number of people willing to purchase it.
However, the supply of shares, be it of any stock, is restricted in the market. It is possible for the investors to purchase only those shares that are owned by an individual already. This leads to a buying and selling phenomenon. The price of the share of stocks will go up when several individuals want to buy the stocks but not much people are interested in selling it. The prices will start to come down only when it becomes way too expensive for investors to buy the shares.
So, apart from supply and demand, let us explore some additional factors that influence the performance of the stock market.
Factors affecting the stock market
Some of the prime reasons include-
- Firm’s Financial Status: The financial status of an organization also has an important role to play in influencing the performance of the stock market. In case it is anticipated that the company is not going to do well in time to come or they declare losses in earnings, then its stocks will automatically go down. It is definitely necessary to evaluate how a company has performed in the past. However, to make correct stock investments, it is more important for the individuals to analyze how the company is expected to perform in the future. Remember that the past of a company can always motivate it to do the same in future too but there is no guarantee that the company will continue to make profits in time to come.
- Economy: the current economy of the country, as well as the whole world, also influences the performance of the stock market. Whenever there is the healthy economy and the countries seem to prosper, it is very likely that the stock markets will boom and the prices will go high. Similarly, if the economy is dropping, this indicated that the companies are not making adequate earnings and individuals are losing their jobs. This will automatically bring down the values of stocks.
- Industry health: The present health and condition of the particular industry in which the company is performing also decides the stock prices. If the industry is growing and it is expected for the companies to make great profits currently, then the stock values will deficiently rise.
If you too are planning to float your money in the stock market, analyze all these factors to understand if this is the right time for you to make the investment or not.