There are 7 major factors which will keep the traders busy this week according to the experts.
1. Economic growth.
Higher economic growth or better prospects for growth will help firms be more profitable because there will be more demand for goods and services. This will help boost company dividends and therefore share prices.
2. Interest rates.
Lower interest rates can make shares more attractive for two reasons. Lower interest rates help boost economic growth making firms more profitable. Also, lower interest rates make shares relatively more attractive than saving money in a bank or holding bonds. If bond yields fall, it may encourage investors to switch into shares which give a relatively better dividend.
Stock markets dislike shocks that could threaten economic stability and future growth. Therefore, they will tend to fall on news of terrorist attacks or spikes in the price of oil. They will also dislike political instability which may make it difficult to pursue strong economic policies.
4. Confidence and expectations.
A key factor is the mood of investors. If they receive economic news that gives optimism then they are more likely to buy shares. If they receive bad news they will sell. This is why in the depth of a recession; stock markets can start to rise. Investors are always trying to predict the future. Therefore, if they feel the worst is over — the stock market can rally — even when economic fundamentals remain poor.
5. Bandwagon effect.
At times the stock market seems to over-react to certain events. For example, in 1987, relatively little bad news caused
the stock market to fall 25%. Even today it remains a little mystery why the stock market fell so much — there was no economic problem. In fact, the stock market soon recovered its lost ground. Part of the issue is that people follow the mood. When prices fall, people may feel the need to follow suit and get out of the market.
6. Related markets.
Often investors have choices. For example, rather than investing in stock market, they could buy government bonds or commodities. If investors feel government bonds are overpriced and likely to fall, then the stock market can benefit as people move into shares.
7. Price to earnings ratios.
Some investors and economists, such as Robert Shiller feel the best guide to the long-term performance of shares is their price to earnings ratios. If share prices rise significantly above historical averages, then this is a sign that shares are becoming overvalued and are due a correction at some point in the future.
How to learn the analysis of Stock Trend?
The first and foremost thing to do is Practice and have patience. You know “Practice makes participants perfect”. The best way to practice is using simulators or fantasy games.
There are fantasy games which are related to stock market, like; BYSOS Stock Fantasy Game, you can play games, learn the stock analysis, and earn real cash. Click here to Play
BYSOS allows you to create a portfolio of stocks, this helps you to know how the stock market is trending. You will need to analyse the share prices of companies which are listed in NSE and select 12 out of given 20 stocks in the BYSOS Stock Fantasy App. The best portfolio will be eligible to top in the ranking list and be a champion