Reason for Share Price Fluctuation

Reasons for Share Price Fluctuation

The following are important reason for Share price Fluctuation

1. Inflation in the Economy
2. Market expectation about results
3. Political Crises
4. Monetary Policy
5. Major Acquisition or Merger

1.Inflation in the economy :- 

If there is high inflation in the economy . The market expect that Govt is going to control the money supply by enhancing the interest rate on Govt bond . Due to high interest rate the Investment will be transferred to the Govt bond , Therefore , it is expected that in high inflation the share price will come down.

2.Market Expectation about Results 

The market expectation about the performance and results of the organization also play vital role in price fluctuation. A positive expectation will raise the prices of share while a negative expectation will bring the price down.

3.Political Crises 

The political crises will effect the share price adversely . it is almost definite that in civil war or other political crises will bring the stock down.

4.Monetary Policy 

if the Govt introduce the monetary policy to control the money circulation in the economy. Then this situation will lead to lower the price of share while in case of more money supply the price are expected to flourish.

5.Acquisition and Merger :- 

The acquisition and merger will also impact the prices of company. The prices will depends on market expectation about the future performance in case of merger and acquisition.