Stock price is the price at which that particular scrip is traded in the market, It is also known as market price.

Then market price of the scrip is influenced by two specific factors, they are

1. Stock specific factor: It is related to people’s expectations about the company, its future earnings capacity, financial health and management, level of technology and marketing skills.
2. The market specific factor: It is influenced by the investor’s sentiment towards the stock market as a whole. This factor depends on the environment rather than the performance of any particular company. Events favorable to an economy, political or regulatory environment like high economic growth, friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in the market. On the other hand, unfavorable events like war, economic crisis, communal riots, minority government etc. depress the market irrespective of certain companies performing well. However, the effect of market-specific factor is generally short-term. Despite ups and downs, price of a stock in the long run gets stabilized based on the stock specific factors. Therefore, a prudent advice to all investors is to analyze and invest and not speculate in shares.


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