Ask Me Anything

Few days back i started trading in currency pairs of USDINR,when i was new to the financial market trading,i had lots of doubts in my mind such 

Why the prices of currency pairs fluctuate so fast ?, 

Who changes the rates so frequently ? but with time i got knowledge and came to know that there are various reasons for the fluctuation of these rates.

The rate or price of currencies, Commodities or Stocks that are indexed in various stock exchanges.

So If you are also a new investor or trader in financial market then you might be wanting to know Why the prices of Scrips that are indexed on stock exchanges move so fast,you can read the factors which influence the price price on Stock exchanges.

NSE NOWOMLINE TRADING PLATFORM

*Financial Position of the company : The prices of scrips are influenced by the financial position of the company.Good financial results increases the rate of security in the market.The rate of dividend also affect the market price of shares.Higher dividends attract more customers and therefore increase the market rates.On the other hand if a company fails to pay the dividends or pays the dividend at low rates,the shareholder sell their holdings and the price of share will come down.

*Demand and supply factors : Demand and supply of a particular scrip directly influence the rate on stock exchanges.If the demand is more and supply is less then the market price will increase.On the other hand if the demand is less and supply is more then the price will go down.

*Role of financial institution : The financial institutions directly affect then price of securities at stock exchange because they deal in bulk quantity.When they purchase a security,it reduces the supply of scrip and hence the market price increases.

*Speculative activities : The market price are also affected by Speculative activities  operators and investors.The speculator may create artificial scarcity in a particular security by purchasing the available shares.Once they control the demand and supply of shares, they start dictating the price. Harshad Mehta scam is an example of it.

*Government policy : The government police also  affects the price on stock exchanges,If government adopts the favorable policy for the investors then the market will start becoming bullish and if the government policies are adverse then the market will start becoming bearish.

*Interest Rates : Prevailing interest rates in the country also affects the prices of scrips listed on stock exchanges.The high interest rates attract more money towards the money market and therefore the prices at capital market will fall down due to low demand of securities and Vice Versa.

*Trade Cycle : The trade cycle also operates in the capital market.The various stages also influences share prices like other industries.The increase in price could be seen in boom period.The depression period brings stagnation in groth and price goes down.

So These were the things that affect the rates of securities on stock exchange.