If there is a buyer for every sale, why does the stock market fall?
If you are a regular investor in stock markets, or even a viewer of TV news, you must have come across these phrases:
• None On the day the stock market or some stock falls, experts say: ‘The market or a stock is going down because there are ‘more sellers than buyers’.’
• None On the day the stock market or some stock rises, experts say: ‘The market or a stock is going up because there are ‘more buyers than sellers’.’
In every single trade, there is exactly one buyer and exactly one seller.
To say that there are ‘more buyers than sellers’ (or vice versa), is not just meaningless, it is plain and simply wrong.
‘When the markets fall, often we hear that there are more sellers than buyers in the market. But that is not technically correct. Markets work on supply and demand in balance principle, so the thing which changes is the PRICE. So when the demand and the supply get balanced at a lower price, it means the market has fallen. And vice versa, if this balance is achieved at a higher price, the market has gone up,’ says Pankaj Sharma, ESG Specialist, COO at S-Ancial and Partner at EMAlpha.
To further elaborate on the point; the price of a product/commodity in a traded market provides :
• None Value in rupees of the underlying asset.
• None Provides an avenue to two people to exchange goods for money using a common denominator (rupees is the common denominator in India).
• None Based on the previous ...
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