The question in the minds of every investor that springs up is why the prices of stock change on a daily basis. Vodafone’s idea share price is reported as a daily fluctuation in terms of prices and do you have any idea on why this turns out to be the case? There does not seem to be any simple answer related to the question. Numerous factors come into prominence that determines the direction and the movement of a stock. Yes, you may understand these factors, but making an attempt to predict the market turns out to be a futile task. But still, there are a few factors that will give you an idea of how to predict the prices of stocks.
The equation of demand and supply
First and foremost, you need to understand that the share market is a market. Just like any other market the price of a product is determined by the demand for the product in the market. For example, during summer a lot of people purchase products that provide them respite from the heat. Lemons happens to be the top draw among the masses and during summers you do come across a major rise in the prices of lemon.
Since the supply of lemon rises it becomes difficult to keep up with the price of the same. It is something that goes on to become scarce in the market. For this reason, the retailers push the price of lemon at a high price since the demand is higher than the supply. What it means is that there is a major increase in the price tag of lemon from Rs 2 to Rs 5 at this point of time. This is bound to be the case with other commodities that happens to be a top draw during the summer months like AC, fridge etc.
What tends to happen in a stock market is no different to the existing situation. For example if the demand for a particular stock tends to rise so too the prices are expected to rise. Since every sale is bound to attract bidders for the stock, the price is bound to move higher. On the other hand if there is a drop in demand for a particular share, few bidders are attracted to the share and it is known to fall down.
The reasons for the change in stock price
Now that we are aware about the modus operandi of stock prices, the question that often crops up is how do the prices of the stocks go on to change every second. An investor who is better placed to figure out the change in the price of stocks would be able to balance their portfolio in a better way. Investor along with the market sentiment drives the stock market.
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