This is a general question, and I would be very grateful if anybody can help me with the answer.
"What is the exact reason behind the stock price change depending on the Company performance/News etc ?”
As per my understanding some of the companies, they are not providing the dividends to the share holders. In that scenario, what is the significance of this stock value change depending Company performance etc?
Once the stock come into IPO, what will be share holder’s benefits from the company performance rather than just buy/sell the stocks?
What is the exact reason behind the stock price change depending on the Company performance/News etc
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Performance & News impact the price movements of a stock. For eg:- Kingfisher Airlines (KFA), when there was a NEWS on KFA that company is not able to pay the salary for the staff, its a negative impact & ever holder of KFA starts selling the shares, heavy selling of shares leads to a sharp fall in the price. Instead if NEWS says KFA has acquired stake in Singapore airlines for the expansion of business, then the price of the same would have been went up.
Performance is the behavior/activity of the company & news is a information of its activity. Sometimes news can be a rumor has well.
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Hi Manu,
The fundamental reason why stocks move is because because of the Supply & Demand for the stock.
There are however various factors contributing towards this Supply & Demand, factors like earnings, company results, dividend payout history, etc.
Answering specifically to your question, why stock prices change depending on News is based on people’s reactions towards wanting to buy/sell the stock. If the demand for a stock increases than the supply, price goes up and vice versa.
To give you an example, let’s take an automobile stock, Eicher Motors. Eicher Motors more famously known for manufacturing the Bullet bike in India expects good results for Q1 of fiscal year 2014-15. Now as an individual if you had a choice to invest in Auto stocks would you invest in a stocks that is performing well or otherwise? Similarly everyone would want to invest in stocks performing well. Since the demand for stocks now goes up the price also goes up.
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Additionally, once the stock hits the Secondary markets (post IPO), the benefits for an investor are:
- Increase in the Stock Value resulting in increase in Investment
- Allows you to get more returns on investment compared to Bank Interest, FD etc.
- Liquidity: Allows you to liquidate position at any time.
- Corporate actions like Dividends, Bonus, Rights etc
is there any guidelines as to how much maximum salary a CEO , MD , Chairperson of a company , can draw per annum ?
they are drawing crores of money as salary !
isn’t it an injustice to the shareholders ?
if they draw more salary ; there would be lesser money to give to the shareholders as dividend !
is this fair ?
The price of any stock basically moves due to the demand and supply logic. If there is a positive news regarding a company, more and more people will start demanding the stock and the reverse is true in case of negative news.
Now this is what people cash in on. When they see that demand rise, people buy that stock with the hope that in future, due to rising demand, they will get a higher sell price. This is basically what pushes the stock.
The stock market is basically a marketplace of sentiments. The prevailing market sentiments decide whether the price rises or not and one of the major factors affecting this sentiment is company performance/news.
Bro, I am not an activist neither an union leader. But when the company started think about the founder who did what he did to get the company to that stage what it is now. If you know compounding effect, that’s what maybe is about higher salary.