Why do market fluctuates in stock market

That’s the simplest way to state. But there are larger playing factors involved.

The following are the major factors involved in huge fluctuations in the market. 

Company Earning Reports:

The company profits travel to shareholders. Sadly, the reverse is also true. The company making profits will see a boom in the stock values.

The internal activities of the company, policies, outstanding share value determine the net worth of a company.

The stock prices of a company having a positive balance sheet and rise in profits on the trust wave of people go soaring.

Demand-Supply seesaw:

The stock market is an auction platform where potential buyers and sellers form a united front that is volatile due to the balance shift between the two.

The more the demand of a company or it’s product, the higher goes the price. When the supply exceeds the demand, the price hits a low.

Speculations:

Hypes, rumors, and speculations are not the gossip stock of our homes alone; they can make and break our markets too.

Tittle-tattle about a possible bull market or the bear market has the power to influence opinions. People love to follow suit and market dances to the tune of such speculations.

Global Events:

People today being more connected and aware than before are exposed to world events almost instantly. Any information, catastrophe or even hypes travel with the speed of light. Like many upheavals in life, the stock market is too not immune to global events. Hence the fluctuation.

The political stability of the state:

A stable political establishment infuses confidence and hope in the investors as well as people in the business. A strong commercial ambiance with a promising positivity thus attracts the investors and results in an increase in the market value of stocks.

Economic Policies:

Not all governments follow the same thinking line, just like us. The economic policies of governing bodies directly affect the stock market. Discerning investors thus keep a tab not only on the stocks in hand but also on the political machinery in the state.

Natural disasters/emergencies:

All aspects of human life are affected by natural events/catastrophic events and happenings beyond our control. We are speculative, fearful, and eager by nature. Any event that disrupts/damages the human race on large scale results in market doom too.

Easy availability of credit:

Convenience in getting credit pushes more money in the market. It brightens up the investment options, and the market gains momentum. All this has a positive influence on the market, taking the stock prices up.

Well, this is not all. The stock market is sometimes unpredictable, sometimes a smooth sail. A far-sighted investor has to be sharp, vigilant, and assertive.

Learning to sense the balance between demand and supply, keeping the mind open to world trends, keeping one abreast about what the government is up to are some of the key points one has to master.

There are endless factors involved on deeper levels that sway the stock market minute by minute. To learn the fine intricacies later, one has to fall in love with the market first.

A debate about the share market requires endless cups of coffee. There are a thousand things to be discussed and explored. The very word ‘share’ has its share of joys and hiccups.

A share denotes partial ownership of a company, though it does not imply that the shareholder is an owner in the real sense. The shareholder is just a co-bearer of benefits achieved or losses incurred by the company.

So the shareholder will ride or dive with the company’s fortunes but cannot walk away with the movable assets of the company. The stock market attracts people.

Humans are born with an urge to process and possess more wealth, and in the process, we tend to belittle the risks involved. The same is with the stock market. It has its ups and downs.

A novice trader must go through the tricks of the trade before taking the plunge. Share market fluctuates, and the skill lies in keeping a tab on its pulse. Which factors take the market for a ride must be in the mind of a vigilant investor.

The factors contain the elements of human psychology. Since the stock market is a sort of auction platform, demand for a specific share raises its price, and diminishing the demand brings down the price.