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If you are new to stock market trading and thinking of how to understand the ups and downs of the stocks market, this article will show you the ways to get a grasp over stocks market. The performance of the stocks market is the gross result of the performance of the stocks that are listed at that specific stocks market. That means each stock is the smallest unit in that stock market. So if most of the stocks or to be precise greater volume of the stocks in the stock market perform well in a given day, the performance of the stock market will also look good on that very day. So to understand the stock market well you have to primarily understand the underlying aspects that control the ups and downs of the stocks.

Economic scenario of the country – Besides the movement of the stocks, the global economic scenario and the economy of the county have a great impact on the stock markets. If the economy of the country is rising and seeing a steady growth over the time, the stock market also moves on a positive direction. But if the economy of the country is trailing, it will surely have an adverse effect on the stock market. This fact was proved time and again all over the world irrespective of the country and stock markets. So to understand the stocks market and to predict the future of the market you need to consider the global and domestic economic scenario. Factors that are considered to measure the economic growth like the GDP, import export, foreign currency reserve, interest rates etc play a pivotal role in the ups and down of the stock market.

Stock market trend – The stock market goes through different trends at different times. The cyclic occurrence of the market trends also determine the fate of the stock market in general and have deep impact on the performance of the individual stocks. The trend of the stock market is determined by comparing the price and volume of trading and these two factors have a close relation with each other. There are two predominant trends that are seen in any stock market –bullish trend and bearish trend. When there is more number of buyers in the market and greater demand for the stocks that market is said to be in a bullish trend. But when there is more number of sellers and demand for the stocks is low the market is in bearish phase. There are of course some intermediate trends in the market that occur in between these two predominant market trends.

Trend in the specific sector – Apart from the overall market trend it is often seen that different sectors go through up and down trends at different times. It is basically the performance of the companies in that specific sector and the demand in those sectors that determine the trends. The trend of the sectors has direct effect on the stocks in that particular sector and also has an indirect effect on the overall performance of the stock market.

Trend of the particular stock – Then of course the performance of the individual stocks that also has a deep impact on the stock market in general. As we have already mentioned, stocks can be seen as the microcosm in respect to stock market as the macrocosm. So when individual stocks perform well they are bound to have a positive effect on the stock market and when they fall it also has a negative effect on the market.

These are the factors that are primarily considered to get an idea of the stock market. Depending on these factors, price movement of the stocks and volume of trading the Index of the stock exchange is determined. The Index is also an indicator of the position of the stocks market. Though the index value is determined by evaluating the performance of a few stocks, they are considered to be the single most effective indicator of the performance of the stocks market. So if want to understand the stock market and take your investment decision on that basis, follow these aspects closely and you will have an in depth understanding of the stock market.

 

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