Stock prices move up and down every single day, and for many beginners, this constant movement can seem random. But in reality, stock prices change because of specific factors and market forces. If you’re new to trading or investing, understanding what moves stock prices is the first step toward making informed decisions.

  1. 1

    Supply and Demand

    At its core, stock price movement is determined by supply and demand.

    • If more people want to buy a stock than sell it, the price goes up.
    • If more people want to sell a stock than buy it, the price goes down.

    This happens in real-time in the stock market, where millions of traders and investors are making decisions based on their outlooks and strategies.

  2. 2

    Company Performance (Fundamentals)

    Investors always watch a company’s earnings reports, revenue growth, debt, and future outlook.

    • Strong financials usually increase confidence and attract buyers.
    • Poor performance can lead to a sell-off.

    Quarterly earnings are key moments when stock prices often move sharply based on whether results beat or miss expectations.

  3. 3

    Economic Indicators

    The stock market is highly influenced by the overall health of the economy. Factors like:

    • GDP growth
    • Inflation rates
    • Interest rates (like RBI or Fed decisions)
    • Unemployment numbers

    All play a role in investor sentiment. For example, rising interest rates may lower stock prices as borrowing becomes more expensive and business growth slows.

  4. 4

    News & Events

    News can cause instant price movement. It includes:

    • Company-specific news (new product, leadership change, lawsuit)
    • Industry news (like regulations or technological developments)
    • Global events (wars, pandemics, elections, oil price changes)

    The market reacts not only to actual events but also to expectations and rumours.

  5. 5

    Market Sentiment

    Sometimes, price movement isn’t based on logic but on emotion:

    • Fear and greed drive short-term moves.
    • Traders often follow trends or react to news emotionally.

    This is why markets sometimes overreact both positively and negatively. Sentiment indicators and tools like the Fear & Greed Index help understand the current market mood.

  6. 6

    Technical Factors

    Besides fundamentals, traders use technical analysis tools like:

    • Support and resistance levels
    • Moving averages
    • RSI, MACD
    • Volume indicators

    These tools help traders identify patterns and potential price moves based on historical data and psychology.

  7. 7

    Big Players – Institutional Investors

    Mutual funds, hedge funds, and foreign institutional investors (FIIs) move large sums of money.

    When they buy or sell in bulk, it affects stock prices heavily. Watching FII/DII activity gives insights into big market movements.