Why Does the Share Price Go Up or Down? Factors That Move Stock Prices Up and Down

What Makes Stock Prices Go Up or Down | Why Do Stock/share Prices Change | How Do Stocks Go Up or Down | What Causes a Stock's Price to Change

Small retail investors like us, seeing the price of stocks going up or down in the stock market every day, feel a little scared but the same thing also seems interesting.

Because when the price of the share rises, we want to buy the share and when the price falls, we want to sell the share,

But it is wrong in both ways…

If you also take quick decisions by going up or down of stock, or by raising and falling in Sensex and Nifty then you are on the wrong path.

Because first, you should at least know that if a stock is continuously going up then there must be some reason behind it.

And in the same way, if the price of a stock is falling continuously, then there must be some reason behind it too.

Your job is to find that reason and today we are going to discuss this topic in detail. Why does the share price of a company fluctuate up or down in the stock market?

Let's know

Factors That Move Stock Prices Up and Down

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What Makes Stock Prices Go Up or Down | Why Do Stock/share Prices Change 

Every investor knows that there are always ups and downs in the stock market and if we talk about why the share price goes up or down, then there is no definite reason for this, it depends on many factors.

Today, if the price of a stock is up, it will be down tomorrow, there will be an uptrend in the market, and that is why the share price goes up and down.

But the most important thing is that every investor should know how the price of the stock is determined, and why the prices of Sensex and Nifty keep changing so quickly in the stock market.

And what is the reason behind it?

Below I have told you some such points with examples that explain How Do Stocks Go Up or Down | What Causes a Stock's Price to Change and What Makes Stock Prices Go Up or Down | Why Do Stock/share Prices Change

So let's know -

How Does the Share Price Go Up and Down?

Before knowing about all these points, you should have basic knowledge of the share market like if you are buying shares of a company, then you should know that there is some business behind it and you are going through that share or Investing money in the business of the company.

I mean you should not invest only by looking at the stock price or chart pattern, but you should also look at many other factors like the growth of the company and whether the company has taken on too much debt that he is not able to pay…

This type of basic information you should have before buying any stock, only then you will be able to understand well why the price of any stock is more or less? And how do their prices rise or fall so quickly?

Let's start today, which is the first.

1. Company's performance

You would know that every company listed in the stock market does some business in which it sells any of its products or services.

And every company has to present its quarterly results every 3 months, in which their sales and profit are told.

In the quarterly result, the company tells you how much money or loss it has made this time in comparison to the previous quarter, you can find information about it by visiting the website of NSE or BSE stock exchange.

By looking at the company's quarterly results and financial statements, you get to know how the company is performing, whether the company is making a profit or is in the loss.

And because of this, the price of the shares of that company is up or down, which means if the quarterly numbers of the company are good, then people start buying the shares of that company, and suddenly the price increases on the second day.

Similarly, when the company has reduced its revenue or profit compared to the previous time when people start selling their purchased shares, the price of that share starts decreasing.

And that's why share prices go up or down depending on how a company performs.

2. Due to news

You must have often seen that if there is any fraud in any company. For example, if there is any news like insider trading on its management in a company, then the stock price of the company starts falling suddenly.

Meaning, due to any bad news, the share price suddenly comes down and due to good news, the share price starts going up.

We have seen many examples of this in the past, including a giant company like Asian Paint, on which some false allegations were made but later everything became normal.

That is why it is said that if you have faith in the business of the company, then you should not be afraid, no matter how much the share price goes up or down.

3. Due to some new announcements of the company

The right decision of the company can increase its share price and the wrong decision can sink your money, so keep an eye on company announcements, whose shares you want to buy.

Whenever a company makes a big announcement, Sometimes the share price decreases or increases very fast.

For example, you can look at electric vehicles and the renewable energy sector.

Till the last few years, there was no demand for the shares of Tata Power and Tata Motor Company, but ever since the Tata Motor Company announced the launch of the electric vehicle market, its share is seeing a steady increase.

4. Due to Dividend

DIVIDEND - When a company earns a good profit, it also gives some part of it to its shareholders, which we call a dividend. But it is also true that not every company listed in the stock market pays dividends, but reinvests the profits earned in its business.

Most investors are excited about dividends, so when a company decides to pay dividends in its annual report or at the time of quarterly results, its effect is visible on the share price of that company on the next day itself.

And the share price of the company goes up rapidly because people start buying shares of that company in the greed of dividends, which increases the share price due to an increase in demand.

WHAT IS DIVIDEND - The dividend is a part of the company's net profit (net profit) paid by a company to its shareholders.

Whatever profit the company makes, the (net profit) left after tax and all other adjustments is divided equally among the shareholders of the company, and the person who has the number of shares, that person receives a dividend in the same proportion,

For example, if I have 100 shares of TCS, on which TCS paid a dividend of Rs 5 per share, it means I will get a total dividend: 100 X 5 = Rs 500.


INTERIM DIVIDEND – When the company declares a quarterly dividend within the financial year itself, it is called INTERIM DIVIDEND.

FINAL DIVIDEND – When the company declares an annual dividend at the end of the financial year, it is called FINAL DIVIDEND.


Some of the major benefits of dividends are as follows

  • The dividend is TAX-FREE INCOME, so if you get a dividend on any stock/share/mutual fund, then there is no tax on the dividend.
  • The dividend is a fully PASSIVE INCOME, and dividend income is also included in a balanced investment portfolio.
  • There is no difference in the share price of a company on its dividend in the market, if the company wants to give a dividend, it pays it on the face value of the share.

5. Due to bonus or share buyback

As a dividend, when the company announces to split bonus shares or shares or wants to buy back shares, then there is a sharp jump in the value of the share.

6. Reasons for Demand and Supply

You would know that not only the Indian stock market, but every market in the world runs on the law of demand and supply.

This means that when the supply of something is less and the demand increases, then its prices also increase, and similarly when the supply is very high and the demand is less than the prices fall.

You can see this demand and supply game daily in the stock market.

When the demand for power or electricity increases in the global market, then the shares of companies in the power sector start going up.

Similarly, when there is a major crisis somewhere in the world, it affects every market in the world apart from the global market. Due to this, the economy of the country weakens and the share price of strong companies listed in the NIFTY50 index also starts falling.

This means to say that in the sector whose product or service demand increases, the share price of the companies of the sector also increases, and when the demand decreases, the share price starts falling.

7. Reasons for the rise or recession [ slowdown ] in the stock market

Due to the economic crisis, many times the country has to go through different difficulties, due to which creates a bear-run situation in the market.

Inflation ( the rate of increase in prices over a given period) is a big reason for this because when there is inflation in the market, companies increase the price of their product or service, due to which people stop buying them.

And when people stop buying goods from the market, then the business suffers and the companies are not able to earn profit.

And when companies are not able to earn a profit, then people start selling their purchased shares, due to which the effect of a bear market is seen.

A bear market is a situation when the stock market experiences price declines over some time.

If you see carefully, then this entire cycle is directly connected with inflation.

See, if you are a conscious stock market investor, then you should also keep an eye on the ongoing economic issues in the country, such as the budget announcement every year in the country. There is a lot of movement and movement in the stock market on the very next day itself.

Due to this, the next day itself takes you to see the bull run or bear run in the stock index indices like Nifty and Sensex.

8. Promoters holding is more or less

Promoters holding means the amount of stake held by its initial promoters, management, and founders in the company.

A stake is often used to describe the amount of stock an investor owns.

Normally the promoter holding should be 50% or more.

If the holding of promoters in a company is very less, then you should not buy the shares of that company because it is believed that if the promoters are selling the shares of their company, then it means that they do not trust their own company.

And that's why when the promoter holding of a company starts decreasing then people start selling the shares due to which the share price breaks down and a huge drop is seen.

Conversely, when the promoters increase their stake in the company, the share price starts rising.

How High and Down Can the Price of a Share Go?

Factors That Move Stock Prices Up and Down

New investors in the stock market think that any stock can go up or down, but it is not true.

You must have heard about circuit filters.

Circuit filters are price bands imposed by the Securities Exchange Board of India (SEBI) to restrict the movement of stock prices (up or down) of listed securities. This is to curb manipulation done at share prices by operators.

When a stock goes up too much, it starts getting upper circuits, and similarly, when it falls too much, it starts getting down circuits.

The upper circuit and down circuit can be anywhere from 5% to 20%.

Circuits mostly work in penny stocks. Or a stock that is controlled only by the operator, that means, if the price of a stock is forcibly increased or decreased, then circuits start appearing in it.

That's why no stock can go up or down 1000% or 2000% in 1 day because this happens only in training or cryptocurrency and not in another market.

Let me tell you that if you also want to get such high returns then it would be right for you to trade and not invest.

What causes a stock to rise suddenly?

Why Stock Prices Fluctuate - Sometimes you see that the stock prices increase suddenly. Most of the reasons like this are news only.

As I mentioned above that companies keep on making some announcements like -

causes a stock to rise suddenly: -

  • To Launch a Hit Project in the Future,
  • Launching a New Product,
  • Announcement of Giving Bonus Share and Dividend,
  • Working on New Technology
  • Acquiring a New Company

FAQs - Related What Makes Stock Prices Go Up or Down | Why Do Stock/share Prices Change | How Do Stocks Go Up or Down

Question. Who Rise the Share Price and Who Decreases the Share

There are many such events in the stock market, which have a direct effect on the share price of the company, such as an economic slowdown in the market, the announcement of the company's results, due to good or bad news in the company, etc. Happens.

Question. Who sets the share prices?

When a company is listed for the first time in the stock market through IPO, then it decides the price of each of its shares, at what price it will be listed on the stock exchange the next day. Then as investors buy and sell that stock, its prices start changing.

Question. How do stock prices change?

The prices of stocks or shares fluctuate due to demand and supply. If there are more sellers than buyers in the market, then the share price starts decreasing and when there are more buyers and fewer sellers then the share price starts increasing.

Conclusion - Why Does the Share Price Go Up or Down? Factors That Move Stock Prices Up and Down

In this article, we have given you information about how share prices fluctuate, why share prices fluctuate and why does Sensex or Nifty go up or down? 

We hope that you will find the information given by us useful, if you like the information, then definitely share it with your friends. 

If you want to ask questions, then you can tell us through the comment.

If you think we miss anything then please tell us through the comment section.



If You Have Not Found Your Answer, Then Please Contact us. We, Will, Try to Answer It privately as soon as possible.


I am an engineer by profession but being a blogger is my old day's dream to create my site for those who are more curious about my birthplace than I am coming from (India). the current city lives in Navi Mumbai, India

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