Why do Stock Prices Change Overnight in BSE and NSE?
Imagine that last day, when the stock market was closed, your stocks were performing well and suddenly the value of your stocks depreciated within a night. I know, you might be astonished when you face such situations but as an investor you should be well-prepared for it.
The fluctuation in the price of your stocks doesn’t occur at midnight. It happens before and after the trading sessions within a short duration of time. As we all know, on NSE or BSE, the market closes by 3:30pm and this variation of the stock price is dependent on the pre and post sessions of the stock market.
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There are few major factors that shift the stock price before and after the trading sessions. These factors are listed below:
Advantage of Trade Timings:
Many investors are not aware of the trading windows that occur before and after the trade. There is a trading window between 3:40pm to 4:00pm where an investor is allowed to transact the shares. Similarly, before the market opens there is a pre-market session, where an investor is allowed to buy or sell orders. This plays an important factor for the stock price to shift overnight.
People invest long term in a company based on its worth and how much it’s predicted to earn in the long-term. Companies listed on the stock exchanges have to declare their earnings every year. If the company’s earnings have failed to meet projections or if the company has earned less than its projections, its share price will mostly fall. Have a close look at the company’s performance and its stock value for better returns.
Good News or Bad News:
If the company reports some good news such as an interest-hike or breaks into a new-market, it’s most often seen to be a good financial health. Similarly, when a company has to sell a part of its assets, let go of employees or if there is a downturn in its earnings, it reflects that the financial health of the company is bad. Based on the impact of the news, people will tend to buy or sell the stocks which could reflect the variation in the stock price.
Overvaluation or Undervaluation:
Some expert traders watch for the movement of overvaluation or undervaluation to buy or sell the stocks. These predictions are based on the company’s performance in the near future. This will also lead to an increase in demand and result in share price rise delivering profits. The predictions can also depreciate the value of the stocks based on the overvaluation of the stocks.
Variation In Stock Value:
Now, that you have analyzed the factors that impact the stock value, you should be aware of the performance of the stock and its future scopes. These situations would mostly occur in short term investments as they have more risk volatility than long-term investments.
So, are you ready to invest in the share market today?
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