Price fluctuation has a great impact on the stock exchange. Price fluctuation is the main upon of the share business in share market. There are many causes of price fluctuation in stock exchange. They are-
Causes of price fluctuation in stock exchange
- : Overall environmental consequences have a great over stock exchange. Both internal and external environment can hamper the activities of the stock exchange. Environments consist of natural, political, economic, legal, social, cultural, physical, and technological and so on.
- Political instability: Political instability can greatly hamper the general operation of the stock exchange. If the political condition is not suitable, the exchange of share or other materials would be reduced badly.
- Customers’ buying behavior: Customers are the main weapons of the stock exchange. If the customers are highly interested in investing in share market, the exchange rate of shares would also increase considerably. This depends on the buying behavior of customers.
- The Economic condition of the country: Economic condition is the most important thing for the stock market. The growth of share market totally depends on the economic condition of a country. If the country’s economic condition is good, the invest in share market would be good. And if the economic condition is bad people will not be interested in investing in this sector.
- Social influences: There is also some social influences related to the operations of this sector. If the people are not habituated to operate in the stock exchange, they will not be interested in investing their money in a big way.
- International economy: Sometimes International economic conditions affect operations of the stock exchange. For example, in 2001, after the tragedy of Twin Tower, the whole worked was going through a bad economic condition. During that period almost every country’s share market was in a bad shape.
- Country’s business condition: If the business condition of any country is good, then the condition of stock exchange market would be automatically good. The business condition of a country has a great effect on the stock exchange.
- Fluctuation of interest rate: It is a general concept that the fluctuating interest rates affect stock exchange operation. Fluctuating interest rate can also change the economic condition of a country.
- Company’s financial condition: The financial conditions of the companies that are issuing shares to buy to the customer have a big impact on a stock exchange. If the financial conditions of the companies are not good, the operations of stock exchanges. Will be affected badly. In some cases, the company can be blacklisted in the share market.
- Organization’s strategy: as the stock exchange is mainly operating in share business, sometimes companies take some different strategies for selling their shares on the market. These strategies do have effects on the stock exchange.
Related Content of Stock Exchange:
- What is the Definition of Stock Exchange?
- Features of Stock Exchange
- Merits / Benefits / Advantages of Stock Exchange
- Difference between Stock Exchange and General Market
- Services and Functions of Stock Exchange
- Trading Procedure in Stock Exchange
- Responsibility of Bangladesh Stock Exchange