No one sets a stock's price, exactly. Instead, the price is determined by supply and demand, like any other product or service.
Stock prices are driven by a variety of factors, but ultimately the price at any given moment is due to the supply and demand at that point in time in the market. Fundamental factors drive stock prices based on a company's earnings and profitability from producing and selling goods and services.
Individual stocks move based primarily on the profits and prospects for each company. The most obvious source of information that impacts those things is each company's quarterly earnings report. Public companies are required to detail their performance each quarter, showing their total revenue and profits.
The law of supply and demand affects all markets. Factors like the rate of inflation or corporate earnings can cause market fluctuation.
Once a company goes public and its shares start trading on a stock exchange, its share price is determined by supply and demand in the market. If there is a high demand for its shares, the price will increase. If the company's future growth potential looks dubious, sellers of the stock can drive down its price.
If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall. Understanding supply and demand is easy.
SEBI is the regulator of stock markets in India. It ensures that securities markets in India work efficiently and transparently. It also protects the interests of all the participants, and none gets any undue advantages.
The company itself doesn't really care about the stock price directly. The executives (and many employees in general) do, because they often own stock in the company. The company also cares about profits and costs and growth and such, all of which are reflected in stock price.
In India, the stock market regulator is called The Securities and Exchange Board of India, often referred to as SEBI. SEBI aims to promote the development of stock exchanges, protect the interest of retail investors, and regulate market participants' and financial intermediaries' activities.
- Market makers influence price more than investors. - Negative selling pressure going into the close actually causes positive price performance overnight. - Buying and selling pressure during trading hours does not influence price direction over the long-term.
The Securities and Exchange Commission (SEC) oversees securities exchanges, securities brokers and dealers, investment advisors, and mutual funds in an effort to promote fair dealing, the disclosure of important market information, and to prevent fraud.
The stock market is mainly a function of demand and supply. These are the forces for driving the markets. If more people investing in that particular stock will give good results and desire to buy the same stock than selling it, the price would rise and vice versa.
The price is set based on valuation and demand from institutional investors. After the initial offering, the stock starts to trade on secondary markets -- that is, stock exchanges such as the New York Stock Exchange (NYSE) or the Nasdaq. This is where we get into the market being a voting machine.
Stock prices are not fixed. The demand-supply dynamics of the market are responsible for the changes in stock prices.
Price controls are normally mandated by the government in the free market. They are usually implemented as a means of direct economic intervention to manage the affordability of certain goods and services, including rent, gasoline, and food.
The richest Americans own the vast majority of the US stock market, according to Fed data. The top 10% of Americans held 93% of all stocks, the highest level ever recorded.
While the U.S. government doesn't directly intervene in the stock market (say, by inflating the prices of stocks when they fall too low), it does have power to peripherally affect financial markets. Since the economy is a set of interrelated parts, governmental action can effect a change.
Understanding Why Stock Prices Change
Stock prices are fundamentally driven by supply and demand. When demand for a stock is high (meaning more people want to buy than sell it), the price rises as buyers are willing to pay more.
A Stock Controller is responsible for ensuring that the company's stock levels meet business needs. They do this by overseeing purchases and pricing reports, replenishing levels when necessary, and monitoring shipments or internal transfers between departments within one business enterprise.
If you are wondering who would want to buy stocks when the market is going down, the answer is: a lot of people. Some shares are picked up through options and some are picked up through money managers that have been waiting for a strike price.
Short sellers are wagering that a stock will drop in price. Short selling is riskier than going long because there's no limit to the amount you could lose. Speculators short-sell to capitalize on a decline. Hedgers go short to protect gains or to minimize losses.
But in normal circumstances, there is no official arbiter of stock prices, no person or institution that “decides” a price. The market price of a stock is simply the price at which a willing buyer and seller agree to trade.
While the U.S. Congress passes and amends laws that affect how the Financial Industry operates, it has also set up the Securities and Exchange Commission, referred to as the SEC to make sure that all the players involved are following the rules.
Like any market, in a stock exchange the actions of individual buyers and sellers determine prices. The role of the exchange is to provide fair and functional markets that match buyers and sellers at an agreed price for an agreed volume; that price moves naturally in response to large orders or large numbers of them.