You open the Trading App. And you see the stocks going up in one second and down in the other. The stock prices change every second. What makes this happen?
The answer is simple.
DEMAND and SUPPLY
Demand > Supply
— The share price goes Up.
Demand < Supply
— The share price goes down.
What Impacts the Demand and Supply?
- News:
Good news can have a huge impact on a company’s shares. Good news can make a company’s share rise and Bad news can make it fall.
Example:
COCHIN SHIPYARD:
After this news, the stock rallied to levels of Rs 1800 by the end of April.
- Investors Emotions:
Investors Emotions are the key in the stock market. If the investors are not ready to invest then the share price or the market gets impacted automatically.
Example:
The fall of the market after the news of war between US-Iran shows that the panic-stricken investors don’t like to invest in the market. Even now the uncertainty impacts the market a lot.
The fall of NIFTY 50 Index in March shows us how the investor emotions were in the stage of panic during this time.Investors were worried that the conflict would escalate further and they sold the stocks out of fear or cautiousness.
- Investors Expectations
This is one thing most people don’t expect. Sometimes the share falls even when the company results are good. Unexpected?
It might be but it still happens in the market. Because when the investor expects a company to deliver more and it is not able to match the expectations, the share price still falls.
Example:
Expected Profit Growth: 30%
Actual Profit Growth: 20%
➡️ Stock falls
The company performed well. It just didn’t meet expectations.
- Economic Factors
Economic factors like interest rate hikes by RBI, geopolitical tensions, changes in the rates by the US, inflation and other policy and fiscal measures can directly impact the market.
Example:
On Budget Day (Union Budget 2026-27), the stock market fell when the honorable finance minister announced the increase in the Securities Transaction Tax for derivatives. Investors were worried that it might lead to higher costs which could result in lower trading activity.
Share Prices don’t move randomly.
Behind every rise and fall is a story—sometimes about a company’s performance, sometimes about investor psychology, and sometimes about changes in the broader economy.
Learning to identify these reasons is one of the first steps towards becoming a more informed investor.
Thank you for reading till the end.
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