How Stock Prices are Determined: Demand and Supply
Stock prices move up and down based on demand and supply. If more people want to buy a stock (high demand), the price goes up. If more people want to sell it (high supply), the price goes down. Factors like company performance, news, and market sentiment can influence this demand and supply, causing price changes throughout the day.
Price Action: Candlestick Charts and OHLC
To analyze stock price movements, traders often use candlestick charts. These charts provide detailed information about a stock’s price action for a specific time period (e.g., 1 minute, 1 hour, 1 day).
Each candlestick shows four key points:
- Open: The price at the beginning of the time period.
- High: The highest price reached during that period.
- Low: The lowest price reached during that period.
- Close: The price at the end of the time period.
This information, called OHLC (Open, High, Low, Close), helps traders understand the price movement and identify trends.
Stock Market Indices: Nifty, Sensex, Sectoral Indices
Stock market indices are used to track the performance of a group of companies. In India, the two most popular indices are:
- Nifty 50: Tracks the top 50 companies listed on the National Stock Exchange (NSE).
- Sensex: Tracks the top 30 companies listed on the Bombay Stock Exchange (BSE).
These indices give an overall sense of how the market is performing. There are also sectoral indices that track specific industries, such as banking, IT, or pharmaceuticals. These help investors understand how particular sectors are performing.
Stock Market Timings
The Indian stock market operates in different phases during the day:
- Pre-market (9:00 AM – 9:15 AM): In this session, orders can be placed but aren’t immediately executed. It helps set the tone for the regular trading session.
- Regular trading hours (9:15 AM – 3:30 PM): This is when most trading activity takes place. Orders are executed during this time based on live market prices.
- Post-market (3:30 PM – 4:00 PM): After the market closes, orders can still be placed, but they won’t be executed until the next trading day.
