Share market is an important pillar of the country. This is the pillar of the financial and the economic strength of the country. The share market plays an effective role in the determination of the gross domestic product. With this being the importance of the share market, it is important to talk about the basic volatile nature of the shares. The share market is known for the fluctuating values of the shares.
How do prices get affected?
The companies list the shares in the market. They are actively bought and sold there. But this pattern of trading is determined by the interplay of a lot of internal and external factors. The combination of all of these factors play an important role in the determination of the share market value. The list of the factors which have an impact on the share market has been given in the following way:
Internal factors of the companies
Shares represent the share capital of the company. These companies try to list the shares on the stock exchange so that the public money could be raised. The internal politics of the companies have a direct impact on the pricing of the shares.
The governance practices, the type of the management, the disputes within the organisation and practices like insider trading have a potential to affect the pricing of the shares in the first place. For instance, the recent news of fraudulent transactions in one of the MNCs have deeply broken down the value of the share.
All the external factors like the government policies, the foreign policies, the war and peace situation, the natural calamities, epidemic and the pandemic etc are the essential factors determining the pricing of the shares. Sensex has almost slipped by 5 times in the recent days due to the international turmoil between Russia and Ukraine.
All the international events also have a different impact on the pricing of the shares. It may be difficult to control the external factors. But a proper SWOT analysis may be helpful to begin with in order to predict the threats and the challenges.
Price of Crude, Gold and other Commodities
All the tradable commodities and their prices also affect the determination of the price of the shares. The prices of metals like gold, silver, copper, aluminium and steel have a direct bearing on the stock markets.
If in case the prices of the stock markets fall, then the gold increases. Similarly other types of minerals like crude and other petroleum jellies help in the determination of the price of the share over the period of time. It is the effective interplay of these factors that the pricing of the shares is decided,
At the end, it has to be concluded that these factors may and may not be in the control of the organisation. These factors should be understood to the greatest extent. They should be analysed over a period of time. This analysis can help them to understand the market better.