Introduction
A stock exchange or market is a facility wherein traders may buy and sell financial instruments including equities and bonds. The Bombay Stock Exchange (BSE) and the National Shares Exchange (NSE), are stock exchange intermediaries or the market place that enable for the purchase and sale of stock. Sensex and Nifty are broad market indexes and stock market benchmarks, they are used to evaluate the general profitability of the market.Â
The National Stock Exchange uses the Nifty Index, whereas the Bombay Stock Exchange uses the Sensex Index. And since they reflect the whole stock market, every change in these two indexes has an impact on the entire market.
The market valuation of the stocks, or “market cap,” of a firm is its overall market value. The market cap of a corporation is calculated by multiplying the stock price by the number of shares outstanding. The stock price is a relative and proportionate representation of a company’s valuation. As a result, it only shows a variation in a firm’s market capitalization at any particular period.
Understanding these elements alone are not enough to understand what determines the activity of the market, there are many reasons that define the rise and fall in Market, few of which are:
Rise and Fall in Market
Demand and Supply
A market of any nature, let alone the stock market, depends majorly on the supply and demand of the commodity that determines its price. In a share market the supply and demand of a particular shares determines its price and overall market movement. If a certain stock is in demand and its supply is lesser then naturally the stock value will rise and vice versa.
Industry Policy
Rise and fall in the market may be subject to the industry trend too. In a particular industry if for some policies that affects the whole industry as a whole, changes the change in the market is also inevitable. For example when the gas prices went up, the production of tiles went costlier, which resulted in more expensive tiles, which in turn gave way to fall in the market demand, and this eventually led to plummeting value for tiles stocks.
Market Trends
The Bullish market trend makes way for aggressive investment which makes the stock market to go up and on the other hand bearish market trend leads to fall in stock market because of more investors withdrawing from the market – this trends act as a major factor that marks rise and fall in the market.
Natural Factors
In case there is a natural disaster such as flood, the stock market clearly sees the effect of it if there is loss of assets. On the other hand if the monsoon is average to good that results in better investments and hence results in a rising market.
Global Currency Value
The global currency strength of the Rupee also plays a major role in deciding the fate of the stock market. A stronger Rupee means a stronger market and a lesser value of Rupee against foreign currency will result in a falling market.
Stock market provides much lucrative investment platform but there are several factors that need to be taken into account before you invest. The factors for rise and fall in the market are just indicators and only a thorough market research and a constant eye of the market movement will give you long terms wealth accumulation option.