What are the factors that form the market trends?
Trends are the root cause of the profit and loss that happens while trading in a particular stock. The rise and fall of the prices along with the duration of the share market determines the profit and loss. Let us look into the factors that form the market trends.
The government has a foremost role in determining market trends with reference to forming policies and rules. Reduction of unemployment and price stability can be expected when the government’s expenditures rise. This is known as the fiscal policy and includes equity shares. The growth of the country is eventually based on interest rates which are controlled by the government.
International relations and dealings:
A significant factor that affects the economy of a country is the transfer of funds. The currency becomes weaker when more money that leaves the country. A strong economy is considered when countries export a lot of items. This is a major contribution to the growth of the company.
Prospect and speculation:
Government, businessmen, politicians, and economists come up with different strategy and analysis about the economy of the country. An optimistic growth is expected when a speculation is made in a healthy way.
Sentiment indicator is an important factor where the public opinion is measured.
Hence, prospect and speculation are collectively taken into account to forecast future market rates in the National stock exchange.
The individualoffers made by investors and traders help form the marketing trends. When investment is done based on marketing information based on government activities and policies, a contribution towards shaping market trends takes place. Even if wrong predictions are made, the financial market trends are still being shaped. Once a market trend has been established it takes time for the trend to diminish.
Supply and demand:
It is important to maintain a good relationship between the supply and demand to contribute towards a steady growth in the economy. Whether it is a product, investment, or currency, the demand and supply for it can change the course of growth. When there is a low supply, prices rise and demand increases. On the other hand, where there is a high supply, prices fall and can cause a negative effect. This is why a healthy balance must occur.