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  • Category: Stock Market

    Stock market price fluctuations

    Have a query about Nifty falls? Looking out for the reasons for stock market fluctuations when Nifty falls? You can go through the responses from experts on this page and get answers to all your queries.

    When the price of nifty falls, why does the price of all companies fall along with it?
    Nifty represents only the 50 companies. How and why does any fall in price of nifty affect the companies other than the ones coming under those 50? Isn't the price of a stock dependent only upon the performance of the specific company alone ?
  • Answers

    6 Answers found.
  • The share price of a company depends mainly on the performance of the market. Nifty is related to 50 companies. Generally, the nifty rate depends on international condition, the impact of incidents on the performance of the companies and other government decisions which will affect the market. Basing the incidents in these fields the Nifty value may change. The share of any company even though it is not in NIFTY, will depend on the general features mentioned by me above. So you will understand NIFTY value and other companies rates are also depends on the point mentioned above. So when you see a dip in NIFTY, there will be dip in many of the companies even though it is not related to NIFTY

    always confident

  • When the price of nifty falls, why does the price of all companies fall along with it?

    Nifty 50 is the bench mark of the performance of stocks in the industrial sector, likewise bank nifty (12 large and most fluid stocks from the bank sector), Nifty FMCG represents 15 companies that are into FMCG manufacturing. These are cubical indicators of the performance or daily health in that sector. If bank Nifty goes up or down, then it gives an indication of stability the banking sector in general for that day, If these indices fall then the share price of the stocks (not all) in that sector tend to follow based on the market sentiment and the risk perception of the investors and traders. If Nifty falls, then many traders start selling or do partial profit booking to re-enter at a lower price. This sudden surge in selling also drives the prices down.

    Isn't the price of a stock dependent only upon the performance of the specific company alone ?

    This is far from true.There are many factors that decide the current price of a stock. The global financial health, sudden news of gloom ( Korea firing a missile, war in middle east, a crisis in USA. The last crisis in the Chinese economy triggered a fall in the Indian shares too.
    Potential good news also affects the price, if you have been following the bank stocks, they were under performing because of the losses via the NPA. But when government announced a stimulus package for the NPA, all bank stocks values increased.
    If you look at pharma stocks,when there is a US FDA warning or fine imposed on a company for breach of rules or safety issues, then immediately the pharma company share prices falls down. Apart from this there are many factors behind the scene, the promoters, key big players or institution bulk purchases all of which affects the stock price.

  • Share market is affected by many factors which could be global or national ones. The NIFTY is a benchmark index and represents the average of share performance of the companies by which it is comprised of.
    If the shares of these select companies go down the NIFTY index will also go down.
    It is very interesting to note that going down of NIFTY will trigger a cycle of selling in many companies which do not comprise the NIFTY but due to depressing sentiments in the share market people start to sell them.
    So the movements in the market are not only connected to the performance of the companies but also to many factors which are created by the bull and bear operators who have a knack of making money through variations in share market.
    This is one of the reasons why share market prediction is a difficult task.

    Thoughts exchanged is knowledge gained.

  • NIFTY is an index representing the market price of shares of select 50 companies. These are some top companies and when the overall business in the country is good then naturally these will be doing well and the index will increase ahead.

    When the overall business environment is positive even the shares of medium companies start inching forward. On the other hand when the environment is adverse and demand for goods and services is low the bottom line of companies is affected and share market shows a negative turn. The NIFTY index will also move in line to a downside.

    In such a downside many people start offloading their shares of medium or top companies thinking that they will again pick them up from the market when it slides down further. These people foresee it with company results, economic conditions and political scenarios.

    For example when the present Govt came in power in 2014 the share market rose by a good leap within a period of 6-7 months in hope of expected reforms in economic fronts. It did not rise because of the companies suddenly started making high profits. This is an very important point to note that share market is a reflection of good economic environment and the indexes also represent it.

    Knowledge is power.

  • ''When the price of nifty falls, why does the price of all companies fall along with it? '' -This question i factually incorrect. First and foremost, there is nothing called price of Nifty. Nifty is an index consisting of 50 large-cap stocks. Based upon the price of these 50 stocks, the index points goes up or down. Secondly, if the Nifty goes up, it doesn't mean that prices of all 50 stocks go up and if the Nifty goes down, it doesn't mean that prices of all 50 stocks go down.

    Moreover, these indices (Nifty, Sensex, etc.) indicate the overall mood of the market. It may be possible that this mood of the market may affect/improve prices of some stocks.

    The share market depends upon innumerable factors, which can't be discussed in a summarised form.

    Come on, have a fight. Don't shoot and scoot.

  • Let me make it clear that if Nifty falls then it is not necessary that all the stock prices will fall. If you do a careful analysis of individual stock price you will find that even if Nifty is falling there are some stocks which are still rising. Nifty is an index composed of several small indexes within it like Bank Nifty, FMCG, Pharma, Energy, Auto, IT etc. When more indexes within the Nifty rise than fall or if rise percent is greater than fall percentage within the Nifty index the overall price of Nifty increases. Consider this example. Assume that in some particular day Nifty has risen by 80 points. So do you conclude here that since Nifty has risen there should not be any stock whose price has fallen? No, you should not. It may have happened that most of the indexes within Nifty had fallen but one or two indexes rose by a very high margin resulting in the overall rise of Nifty index.

    So rise or fall of Nifty shows the overall mood of the market and has less to do with individual stock price. As your second question goes price of the stock depends on several factors like company performance, company management, company quarterly results etc and some external factors like good or bad news about the sector, government incentives, policies and taxes imposed on a particular sector to which the stock belongs, FII investments into the stocks etc. If the stock is not affected by internal and external factors mentioned above then it tends to follow the Nifty movement and general mood of the market. But in case there are some other triggers for a stock then price movement of that particular stock may not follow the Nifty movement. Since Nifty index covers all the sectors hence sometimes it may seem that majority of the stocks are rising and falling with Nifty but this is not a rule.

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