4 Important Factors Directly That Impact The Stock Market And Stock Prices

Stock Market has helped investors worldwide to make a fortune out of systematic investments. But, are you aware of the factors that directly impact the Stock Market and Stock Prices? Though the stock market in the past has provided nearly 12% – 15% return yearly, in several instances it has eroded investors’ wealth in a day. So let’s learn the factors that directly impact the Stock Market and Stock prices so that you can make an informed investment.

Factors that Directly impact the Stock Market and Stock prices

Let’s learn about the factors.

  1. Systematic and Unsystematic risk

When you invest in a stock, there are two kinds of risks involved. The expected return from a stock is dependent on the riskiness of the stock. If the risk involved is high, then the expected return from the stock should also be high.

The systematic risk is the overall risk from the market. If the economy is doing badly, then it will decrease the stock price and vice-versa. So systematic risk will directly impact the stock market and stock prices.

Unsystematic risk is a stock-specific risk. This risk doesn’t affect the stock market directly, but it affects individual stocks. These two risks are important considerations that you should keep in mind while doing online trading of stocks.

  1. Market sentiment

Market sentiment is an important factor for Online Trading. You need to see whether the market is bearish or bullish. If the market is bullish, then the chances of stock price rising are more. So you can move with the flow and invest. When the sentiment reverses, you can sell and earn your profit.

  1. Current Worldwide events

Staying updated with the current events of the world is crucial for online trading. Important world indices fell sharply when Russia attacked Ukraine. So events like war, disasters, natural calamities, scams, affect the stock market and stock prices directly. So when you are doing online trading, make a habit of going through current worldwide events.

  1. Political Change

The Stock Market is directly related to government policies. If the political party currently in power is strong, with a great economical outlook, then the stock market will act positively and stock prices will increase, Investors always look for a political party with a strong background and decision-making capability. A good political party helps to bring in more Foreign Direct Investments(FII), which helps to strengthen the domestic market.


Online trading requires discipline and knowledge. You need to understand the factors deeply that affect the Stock Market and Stock prices. If you can predict the occurrence of the factors, then you can make an informed decision and invest accordingly. Online trading without knowledge is risky, but studying the factors will make you an informed investor.

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