How does the overall market decide an individual stock price(using supply and demand graph analysis)?

Question

How does the overall market decide an individual stock price(using supply and demand graph analysis)?

Answer 1

When there's a high demand for a certain stock then many people will buy it.

This is what calls market force!

Opppppppppp

Answer 2

The prices of stocks are not based on calculation always. You can evaluate a stock based on its past performance which you can find from their annual reports.

The method to calculate the share price is to forecast the furture divident payouts from the company and determine what will be the current value of all those payouts as on today (by considering a discount rate).

The future divident payouts from a company will depend on too many factors which cannot be estimated exactly. Depending on the previous annual reports, you can arrive at an estimation and extrapolate to find the future payouts.

It is not related to BSE or NSE. The share prices in BSE and NSE are just the prices at which the share was bought or sold at that time.

Shares are volatile, Share's Stock Prices moves up and down, depending upon various factors, such as;

1. Demand and Supply,

2. Performance of the particular Company,

3. Industry in whole, and Government Policies, etc.

Answer 3

Based on supply and demand, there are buyers who are demanding a stock and sellers who are supplying the stock.  When people enter their orders to buy or sell, they are literally making up the S&D Graph.  If all the orders are plotted it will make one.  As news breaks or people enter and exit the market, the price of the stock will change.  Think of any basic S&D graph and stocks will act the same way.

Answer 4

the supply line on a individual stock is vertical (inelastic - you can't create more shares of a company, at least in the short run).  Its the demand line that shifts based on investor's future expectations.

Answer 5

when there is more demand for the stock, price will go up. if there is less demand for the stock, price will go down.