Share Price
This query is : Resolved
09 July 2016
How demand and supply effect a share price??
19 July 2016
Stock prices are a function of supply and demand. Other influences such as earnings, the economy and so on may affect the desirability of owning (or selling) a stock.
If a company reports surprisingly low earnings, demand for the stock may decline. As it does, the balance between buyers and sellers is changed.
Buyers will demand a discount off the existing price and many motivated sellers will accommodate. More sellers than buyers means there is more supply than demand, so the price falls.
As buyers move into the market, demand grows faster than supply and the price goes up.
Some times supply and demand find a balance, which is a price that buyers accept and sellers accommodate. When supply and demand are roughly equal, prices will bounce up and down, but in a narrow price range.
It is possible for a stock to stay in this range for days or months, before something else disrupts the supply/demand balance.
There is a inter-relation ship with supply and demand and a stock’s price.
If demand for a stock exceeds the supply, its price will rise. However, it will only rise to point where buyers suspect demand is declining.
At that point, holders of the stock will sell. Some may have ridden the price up and believe a reversal is coming so they take their profits and sell.
If a company reports surprisingly low earnings, demand for the stock may decline. As it does, the balance between buyers and sellers is changed.
Buyers will demand a discount off the existing price and many motivated sellers will accommodate. More sellers than buyers means there is more supply than demand, so the price falls.
As buyers move into the market, demand grows faster than supply and the price goes up.
Some times supply and demand find a balance, which is a price that buyers accept and sellers accommodate. When supply and demand are roughly equal, prices will bounce up and down, but in a narrow price range.
It is possible for a stock to stay in this range for days or months, before something else disrupts the supply/demand balance.
There is a inter-relation ship with supply and demand and a stock’s price.
If demand for a stock exceeds the supply, its price will rise. However, it will only rise to point where buyers suspect demand is declining.
At that point, holders of the stock will sell. Some may have ridden the price up and believe a reversal is coming so they take their profits and sell.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- TDS 194-T applicability
- GST ITC REVERSE
- Fixe term employment
- Is any professional CA is here please reply
- TDS on TRUST
- Consolidated financials
- Putting a heading on received mail
- Withdrawal in cash from partners capital account by partner
- TDS on Complimentary "Desi Ghee and Gold Coin" Provided to KBC Contestants
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
