Open Your Free Demat Account
Enjoy low brokerage on delivery trades
Notification
![close image]()
No new Notification messages
Seshaasai Technologies Ltd IPO
Apply for the Seshaasai Technologies Ltd IPO through UPI in Just minutes
Start your SIP with just ₹100
Choose from 4,000+ Mutual Funds on Bajaj Broking
Open a Free Demat Account
Pay ZERO maintenance charges for the first year, get free stock picks daily, and more.
Trade Now, Pay Later with up to 4x
Never miss a good trading opportunity due to low funds with our MTF feature.
Track Market Movers Instantly
Stay updated with real-time data. Get insights at your fingertips.
What Are the Factors Affecting Share Price?
By Bajaj Broking Team
November 26, 2025
5 mins read
News
If you've ever dipped your toes into the stock market, you know how unpredictable it can feel. One day, your favourite stock is flying high; the next, it drops before you can even check your trading app. This happens because the stock world is always moving, with prices shifting based on countless hidden influences.
When you first start investing, you might think only the company's performance sets the stock price. But that’s not the whole story! Many things affect stock movements—some you can study, and others you just have to react to. Knowing the factors affecting share price, especially in the Indian market, keeps you steady when things get bumpy.
What is a Stock Market?
Before delving into the reasons for price fluctuations, we need to understand the venue in which this occurs—the stock market. The market is not a single market or building. It is a massive network where you and millions of others buy and/or trade things like shares, bonds, and derivatives.
Every transaction is executed through an exchange that serves as the official trading floor and a fair, transparent trading platform. In India, exchanges are highly regulated by the Securities and Exchange Board of India (SEBI) to ensure that all traders are subject to the same rules.
The market has a primary section where companies first sell new shares (IPOs) and a secondary section where investors trade shares with one another. Most of the daily price action and excitement occur in the secondary market, where the supply-and-demand dynamic creates price changes in an instant.
Why is Investing in the Stock Market Risky?
You’ve probably heard that stocks are risky. That’s true. Share prices rely on many elements outside your direct control—things like new government laws, global headlines, or even just sudden shifts in investor feelings.
These factors affecting the price of shares can sometimes help you out, but they can also cause sharp drops. This is what makes the market volatile: it’s exciting because it’s hard to predict.
But here’s a key thought: risk is not the same as guaranteed loss. If you study the factors affecting share price and pick wisely, you can actually use that movement to your advantage. The secret is doing your homework, staying patient, and knowing what really moves those stock prices.
Factors Affecting Share Prices in the Stock Market
Now for the interesting part—what truly pushes these prices around? Let’s look at the key factors that influence share prices in the Indian stock market
1. Demand and Supply
This is the bedrock of everything in trading. If more people want to buy a stock than sell it, the price goes up. If sellers are more numerous than buyers, the price falls. The hard part? Supply and demand are always being tugged by news, trends, and what the crowd is feeling.
2. Fundamental Factors
You often hear analysts mention "strong fundamentals." This just means the company's real health—its earnings, how fast its revenue is growing, how much debt it carries, and its profit margins. Good numbers build investor trust, increase demand, and lift prices. Poor financial results usually cause the opposite.
3. Economic Conditions
When the overall economy is growing, businesses do well, people feel good about investing, and stock prices usually follow suit. But during a slump or recession, people spend less, profits dip, and markets get nervous. Key things like inflation rates, interest rates, and GDP growth all play a part here.
4. Government Policies
Changes in government rules can instantly change how investors feel. For instance, new tax breaks or laws that support a specific industry can attract global money and push prices higher. Conversely, uncertain or strict new rules might cause investors to start selling off shares quickly. Union Budget announcements and RBI monetary policy decisions often cause visible shifts in stock market sentiment.
5. Political Climate
When the government seems stable and predictable, investors feel secure about holding assets for the long term. Political trouble or uncertain elections, however, cause short-term jitters—because no one likes to guess what comes next.
6. Dividend Declarations
When a company announces it will pay a dividend, it signals good financial health. This usually boosts the share price because investors see it as a direct reward. But if the dividend is smaller than what everyone expected, disappointment can cause prices to dip a little.
7. Market Sentiment
This is the point where markets fluctuate due to overall traders’ emotions. Higher prices do not always move because of hard facts but, rather, because of broad-based feeling - of hope or fear. In a bull market, for example, folks will buy aggressively, thereby pushing prices higher. In a bear market, worst-case scenarios become dominant, and regardless of how strong a company or stock may be, it can be dragged down lower.
8. News and Media
You simply can't ignore the headlines. News—both local and worldwide—shapes how we view a company. Great news about profits, mergers, or new technology tends to lift shares. Bad news about lawsuits, leadership changes, or losses can drag them down. Even simple rumours can move markets fast.
9. Trends and Investor Behaviour
If you look at charts (technical analysis), you'll see patterns forming—stocks moving up, down, or sideways. These patterns often reflect what large groups of traders are doing. Once a trend starts, many traders jump in, which creates a self-fulfilling movement that keeps the momentum going for a while.
10. Liquidity
Liquidity is just a simple way of saying: How easily can I buy or sell this stock without making its price jump around too much? Highly traded, liquid stocks let you exit quickly if you need to. Illiquid stocks are trickier; one big trade might push the price sharply up or down.
Additional Read:What is Investment Opportunities in Indian Stock Market?
Why These Factors Matter
None of these factors operate in isolation. They persistently work in tandem, as moving parts create a machine. For example, a piece of positive news may brighten sentiment and evoke demand for the stock’s share price to advance, but if the economy shows weakness at that moment, the uplift might be short-lived.
While you won't control the market forces at play, having seen the link will allow you to make rational responses. When you take time to understand the factors that affect share price over time, you will eventually realise the link between how either a regulatory shift or an earnings announcement actually affects trading over the next few days. This knowledge will give you the ability to experience a calm, informed perspective when the market becomes volatile.
Conclusion
Ultimately, the stock market is a manifestation of human behaviour—logical or emotional or any part in between. The factors that contribute to share price fluctuations are many; earnings, inflation, regulatory changes/encouragement, and even generic market sentiment. None of the factors stand alone to offer you the whole picture, but they work together through their influence on overall movement of markets.
Before you invest your money, become accustomed to observing these influences. And when ready, platforms such as Bajaj Broking can assist you in exploring these opportunities in a well-regulated, clarified, and rested space.
Share this article: 
Read More Blogs
Disclaimer :
The information on this website is provided on "AS IS" basis. Bajaj Broking (BFSL) does not warrant the accuracy of the information given herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or suitability for any particular purpose. While BFSL strives to ensure accuracy, it does not guarantee the completeness, reliability, or timeliness of the information. Users are advised to independently verify details and stay updated with any changes. The securities are quoted as an example and not as a recommendation. Past performance is not necessarily a guide to future performance.
The information provided on this website is for general informational purposes only and is subject to change without prior notice. BFSL shall not be responsible for any consequences arising from reliance on the information provided herein and shall not be held responsible for all or any actions that may subsequently result in any loss, damage and or liability. Interest rates, fees, and charges etc., are revised from time to time, for the latest details please refer to our Pricing page.
Neither the information, nor any opinion contained in this website constitutes a solicitation or offer by BFSL or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service.
BFSL is acting as distributor for non-broking products/ services such as IPO, Mutual Fund, Insurance, PMS, and NPS. These are not Exchange Traded Products. For more details on risk factors, terms and conditions please read the sales brochure carefully before investing.
Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For more disclaimer, check here : https://www.bajajbroking.in/disclaimer
Our Secure Trading Platforms
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
+91
|
Please Enter Mobile Number
Open Your Free Demat Account
Enjoy low brokerage on delivery trades
+91
|
Products
Calculator
Mutual Funds & SIP
Important Links
Corporate
Popular Stocks
Indian Indices
Global Indices
Sector Wise Stocks
BAJAJ BROKING
Download App Now
Follow Us :
Useful Links
