Stock market is a very volatile investment segment. Many factors affect the stock market and so the prices of the stocks vary. Though some factors are within the control of the company there are also few which are beyond the control of the management. An understanding of the factors that influence the prices of the stock can help in making a calculated investment in stocks.
Changes within the companies can have a direct impact on its price either negatively or positively. In case the company is planning for mergers and acquisitions then the price will see some changes. Expansion plans, developmental milestones, getting approval for major projects, and so on are some of the influential factors. Similarly, when the company is releasing its financial statement, then its earnings percentage can decide the share price change. Negative news like fraud, negligence, scams and so many other allegations can have bad impact on theimage of the company like which happened for Walmart Stocks. This may lead to fall in the share price.
Many events that take place at the international front can also have impact on the share prices. Events like natural disaster, civil wars, and terrorist activities and likewise can create an international unrest causing the fluctuation in the stock market. The 9/11 incident in USA jolted the stock market and people started investing in lesser risky stocks. Civil wars and the allied military operation in any country may have an impact on the companies supplying military items.
The changes in the interest rates announced by the Federal Reserve in USA can have an impact on stock market. The investors will start selling off the higher risk shares to invest in possibly low risk shares. They may also opt for the government bonds which can give them greater returns.
Changes in exchange rates
The exchange rate fluctuation is yet another factor contributing to market fluctuations. They can lead to an increase or decrease in the share prices according to exchange fluctuations.
Even a simple rumour about a company releasing a new product or expanding into a particular segment and so on can create havoc in the stock market. Some investors may pursue these false rumours as a means to inflate the share price if they hold the shares of that company. However, such false bubbles may finally see a burst level when there is a sudden fall in prices.