what all factors affect the price of a stock?

Like any other commodity, in the stock market, share prices are also dependent on so many factors. So, it is hard to point out just one or two factors that affect the price of the stocks. There are still some factors that are that directly influence the share prices.

Demand and Supply - This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling he stock, the price of that particular stock falls. Now it is difficult to predict the trend of the market but your stock broker can give you fair idea of the ongoing trend of the market but be careful before you blindly follow the advice.

News - News is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. Having said that, you must always remember that often times, despite amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in a volatile market or when there is mixed reaction about a particular stock.

Market Cap - If you are trying to guess the worth of a company from the price of the stock, you are making a huge mistake. It is the market capitalization of the company, rather than the stock, that is more important when it comes to determining the worth of the company. You need to multiply the stock price with the total number of outstanding stocks in the market to get the market cap of a company and that is the worth of the company.

Earning Per Share - Earning per share is the profit that the company made per share on the last quarter. It is mandatory for every public company to publish the quarterly report that states the earning per share of the company. This is perhaps the most important factor for deciding the health of any company and they influence the buying tendency in the market resulting in the increase in the price of that particular stock. So, if you want to make a profitable investment, you need to keep watch on the quarterly reports that the companies and scrutinize the possibilities before buying stocks of particular stock.

Price/Earning Ratio - Price/Earning ratio or the P/E ratio gives you fair idea of how a company's share price compares to its earnings. If the price of the share is too much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way too much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point.

Before we conclude this discussion on share prices, let me remind you that there are so many other reasons behind the fall or rise of the share price. Especially there are stock specific factors that also play its part in the price of the stock. So, it is always important that you do your research well and stock trading on the basis of your research and information that you get from your broker. To get benefit from the effective consultancy service it is therefore always better from professional stock trading companies rather than getting lured by discount brokerage advertisements that you must be coming across everyday.

The main factors would be:

the float or number of shares outstanding

the supply and demand of the stock

how active is the stock or how many times does it get traded in a day

Earnings guidance

Downgrades or Upgrades by analysts

Quarterly and FYE reporting or SEC reporting

Commodity or wholesale prices

Main prices for services or products such as salary costs, gas prices

Write downs

# of shorts on your stock or put options

Insider Buying or selling

Capitalization of the stock

Profit goals or sales growth

Competition

Profit Margin

Mission of company or goals

Catalysts or why is the stock going to rise or fall

How well is the company innovating or bringing new products or services to the market

Is the company using the best technology to save money

How good is management

PE ratios

Amount of Debt - for instance Blockbuster is hurting with debt and may go bankrupt soon

Industry fundamentals - how well is the industry doing for instance is it in Gold or Software (What is the outlook for the industry?)

Hidden assets

Actually there are infinite number of things that affect the stock price many items probably not even noticeable such as Year end selling or stocks added to the S&P 500 causing buying orders as index funds eliminate one company and add another.

Price of stocks are dependent of many factors.

But the prime factory which has the biggest influence on the price of stock is company fundamentals like sales, operating profit, book value, cash reserves etc.

Other global factors which may affect stock prices indirectly are global crude oil prices, financial crisis in US/Europe, political uncertainties at center.

Other company specific events that may stock prices are like company lock-out, accidents, political problem in the region, product development or product obsolete, top management change, expansion and modernization within company.

But it is amazing to note that the stock prices are drives hugely by emotions of the investors. How a investor perceives a stock has a big say on its market pricing. If future cash flow of company is encouraging then investors can pay higher price today to avail future benefits.

Simple Questions don't always have simple answers

Stock of he company doesn't only depend upon it self ..it depends on the society. The stock rate increase with it's demand.

For suppose, lets take a oil company ( Kontham , dubai oil company ) found a oil reservoir in Gulf country. within a month it rate reached the sky ... why???

people thought that with more oil the company will make more profits and finally the share rates would increase later. the demand for those stocks increased withlimted amount of shares. but when these rate increased the company did nothing to extract the oil... but with the money earned with these shares helped it for more production and it's now making profits and the company is one of the rich oil company there.

Nw lets take the company SATYAM that company was fond that i lacked money reserviors there was nothing tofeed the employee and nothing to proseper then people estimated the decrease in the rates thus started selling the shares which finally led to the sudden depression in the share market.

This explanation for one factor.... I recommened u to refer some standard books for STOCK EXCHANGE for the beginers

Biggest factor-set (if there IS such a term) are investor BELIEFS (perceptions). If they think that stock prices are going to go down in the future, they tend to try to sell - so if enough people share that perception then it becomes a self-fulfilling prophecy. If they think stock prices are going to rise then they are likely to try to buy - again, self-fulling prophecy. In general, stability seems to lead to price increases and instability (both of these being perceptions, not necessarily reality) leads to drops in stock prices. If someone knew more specific than this, then they would be bothered to take time to be here on YA; they'd be out there making money hand-over-fist.

You can classify these factors in three groups.

First, factors affecting economy. These factors include jobless claim, industrial production, inflation, etc.

Second group contains the factors affecting the industry. It includes industrial policy of government, competition, innovations, etc.

Third group contains factors affecting the company. It includes company news, earnings, industrial relations (like strike), etc.

Current earnings

Projected earnings (called outlook)

Overall economic conditions

Pending government laws (ones that may affect company, as in US today in financial industry)

Changes in company management

New product(s) in development

Sudden change in sales, up or down

Overall stock market

Outlook for that industry

In the short term what effects the stock price is the overall movement in the market.

In the long term, it is earnings and sales of the company.

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