Now you know about Bulls and Bears, Market cap. But, what the hell is this? Everyday the prices change – who changes them? Bulls, bears? Why do some company’s stock price go up or Appreciate?
The reasons are complex. Garg-Sen Inc. launched 1 million shares @ Rs. 100 / share (face value). Now it gets new technology and skilled manpower with that money. Future prospects become brighter for the company. Everyone starts to be optimistic about Garg-Sen Inc., the market becomes a … what did you say? Bull market? Exactly! Prices of the shares go up. Why? Because the company will generate more money/profit in future! More profit means More Dividends! Others become crazy to get a pie of the dividends and there is More Demand than Supply! As a result, share prices go up, because the number of shares in market are lesser than the demand!
Now another situation. Garg-Sen Inc. fails to implement a plan well, it flops. Everyone loses hope – exactly! It’s a Bear Market! Future is dim for the company – share prices go down! The supply is more than the demand, shares sell at cheaper rates.
This explanation is very simplistic; just to make the beginners understand. As you learn more about stock markets, in future modules I’ll throw more lights on the complexity of the process. Till then, be happy with this explanation.