There are several factors that can be cause to change price of a stock in the stock market. These factors can be broadly classified into two categories, i.e i) Technical factors, ii) Fundamental factors.
Major technical factors are:
a. Demand and Supply: The basic concept of demand and supply applies to stocks as well. The price tends to rise naturally if there is more demand for a stock than the supply. Conversely, prices can decline if there is more supply than demand raised in the market.
b. Technical Indicators and Chart Patterns: Technical analysis tools and indicators such as moving averages, support-resistance levels, trend lines, oscillators, etc. are used to identify patterns and trends in price movements. Analysts, traders and investors often make buy or sell decisions based on these technical signals which can impact prices.
c. Trading Volume: High trading volume can indicate that market activity has been increased and can have an impact on stock prices. Large volumes often accompany significant price movements surely.
d. Market Orders and Limit Orders: Market orders to buy or sell stocks at the prevailing market price can immediately impact prices by matching with available buy or sell orders. Additionally, limit orders which specify a price at which an investor is willing to buy or sell can impact prices when they are executed.
Major fundamental factors are:
a. Earnings Reports: Earnings reports can significantly impacts on stock prices whether it's positive or negative. It can lead to increased demand and a rise in stock prices if a company reports better-than-expected earnings. Conversely, disappointing earnings can lead to a decrease in prices.
b. Economic Data: Economic
indicators such as GDP growth, employment data, inflation rates, interest
rates, currency conversion rate, etc. can influence investor sentiment and market expectations. Positive
economic data can boost stock prices and negative data can lead to decline prices.
c. Industry or Company News: News
specific to an industry or company such as product launches, mergers and
acquisitions, regulatory changes or legal issues, etc. can affect stock prices.
Positive news tends to increase prices while negative news can result in
declines.
d. Dividends and Stock Buybacks:
Announcements of dividends or stock buyback programs can impact on stock prices.
Dividends signal a company's profitability and can attract investors while
stock buybacks reduce the number of outstanding shares that potentially increasing
the stock price.
e. Market Sentiment and Investor
Psychology: Overall market sentiment, investor confidence and prevailing
market trends can influence stock prices. Positive sentiment and optimism can
lead to price increases while fear or negative sentiment can drive prices
down.
It is important to note that, stock prices are influenced by a complex interplay of various factors and their movements can be unpredictable. Moreover, market participants' perceptions, expectations and emotions also play a role in price changes and making it a dynamic and evolving process.
