WHAT MOVES STOCK PRICES???

CHAPTER 4
WHAT MOVES STOCK PRICES.

Stock prices are directly related to the company’s earnings, but what exactly makes this prices move? There are no hard and fast rules to this. The news report of a specific company would make the investors have more stocks of it or the negative news can make the investors move out of those companies’ holdings by selling them.
The other reason for the market to sway is countries attempt to correct the inflation. If in the country usually higher or lowers the interest rates, generally changes the stock prices.
According to analyst, amateur investors also can be a reason to move the stock market up and down. Amateur investors out of inexperience normally make decisions on press releases or rumors
The day traders are also considered the major contributor for the ups and downs of the stocks, as they generally deal in huge numbers of stock which affect the stock.
The company’s earnings are the most important factor which can change the position of the market, we have to always remember that above all the companies have to make good earnings, so as to show profits and sustain themselves in the market. If the company’s are able to show that they have met or exceeded their profit margin , the stocks of the company will automatically go up, but if vice a versa .. If company falls short in meeting the profit margin the immediate reaction of the investors would be to sell the stock holdings of that company.

So to conclude, there is no exact reason for the stock prices to move up or down…
Success in investing comes not with how and a dash of luck, but with analytical and cool mind.


MARKET TREND: BEAR OR BULL!!!!
Where these names do came from? Remember bears are sluggish and bulls are forceful. The bull flairs its thorns up when tries to attack its prey and the bear swipes downs, this is metaphorically depicted in the stock market. When the market has trend is upwards it’s said to be a Bull market and Bear market when the trend hits the downward graph.
BULL MARKET
A bull market trend is associated with increasing confidence of the investors, and anticipation of the future rise in the prices which would motivate the investors to buy the stocks. India’s Mumbai Stock Exchange Index, SENSEX, was in the Bull Run for almost five years fro2003 to 2008.

BEAR MARKET
A Bear market is a steady drop in the stock market over a period of time. It is accompanied by pessimistic approach taken by the investors anticipating future down fall in the prices and hence starts selling the shares. No specific definition is available for the Bear market. But one generally accepted measure is a price decline of 15 % over a two month period of time.