In the turbulent market dynamics of today, the stock prices are determined by a host of parameters. A market-place can be considered to be a meeting point for the factors of demand and supply the dynamics of which impact stock prices at all times. Despite all kinds of analysis, it is quite difficult for traders to gauge future trends as far as stock prices are considered. However, keeping in mind certain points that are bound to impact stock prices can help alleviate the risks of potential loss and can help traders in optimizing their earnest monetary gains over some time. Generally speaking, the following are certain important factors that affect stock prices:
Demand and Supply curves:
The mutual relation between demand and supply is one of the major parameters that impact stock prices. Generally, when the demand is higher than supply, then there is a corresponding increase in stock prices and buyers may be inclined to sell at a quicker pace. Inversely, the stock prices decrease when the supply is larger than demand.
Dividend rates:
The emerging future trends of shares and stock prices can be visualized through dividend rates. At times, any company may decide to change its dividend policy (as per pre-decided rates). This has a direct bearing on the stock prices of the company and the prices of similar stock ventures i.e. companies having similar stock valuation in the market. This is in fact, one of the main reasons why traders are encouraged to maintain a diverse stock portfolio so that rate fluctuations do not have a major impact on monetary gains.
Trading channels and general nature of trading:
If the market-trend happens to be in favor of rapid selling, then the stock prices are bound to decrease generally. Similarly, when occasionally the stocks are stored and the circulation of liquidity over stocks is decreased, the overall stock prices may increase over some time.
Overall management of the stock-company:
Human resources and the way things are managed in a company is another important parameter that decides the stock valuation. If the process management in a stock company is productive, then there is bound to be an increase in the stock prices. This is because a streamlined and transparent system will yield better dividends and the market-reputation will increase. This also a profound impact on the market-visibility and brand-representation of the company.
Governmental policies:
This is one of the key factors that impact stock prices. The policies framed by the government regarding trade networks etc. directly impact the core mechanism of trading including costing and pricing. A sound administrative network for laws and by-laws of stocking, taxation, etc. makes the structure of stock pricing robust and flawless.
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