Why Does the Stock Market Price Rise and Fall?

Stock prices change every day because of market forces of Supply and Demand. When more investors want to buy a stock (demand) and this demand is greater than what is available (supply) in the market, the share price will rise. Similarly, when there are more investors want to sell a stock (supply) than buying it (demand), the share price will fall.

There are various factors that affects stock prices such as political situation, inflation, recession, change in interest rates, oil and energy prices, and so on. These factors may be both external and internal.

External factors are those which are beyond the control of the company, for examples:
- world events
- raw material prices
- market trends
- monetary policy
- inflation rate
- globalization
- natural disasters
- geo-political events
- investor confidence

Internal factors are the factors that are within the control of the company, for examples:
- share bonuses
- stock split
- profitability of a company
- attractiveness of the company
- weaknesses of the firm
- company news and announcements

* Next: Factors Affecting Share Prices