It is an accepted fact that prices change from moment to moment; in fact, fluctuation in price is the only constant factor. Have you ever tried to figure out why this happens with stock markets and not with other markets? Going back to the basics of the pricing theory in economics, price is formed at the level at which demand matches supply. On the one hand, the supply of share stocks is fixed since the company cannot increase or decrease its capital on a frequent basis. But the profit motive has most shareholders, not involved in the management of the company, to keep looking for good bargains, opportune moments at which to offload their holdings. Such people would like to exit from the company if they get a good price.

On the demand side, there are several developments in the economy and industry that makes a company s shares a good buy at a particular rate. Hence, we have a large set of buyers who place a demand for these shares. With 2 million investors participating in the market, a few thousand would be interested in the shares of a particular company. Technology has helped us to constantly match demand and supply requirements on a second-to-second basis. This balance between demand and supply constantly alters the price of a share.

Thus, the share is an instrument, representing an asset, which is bought and sold with a profit motive. It is this objective which drives buyers and sellers to the market and their perception of a value attached to a company share that determines the price.

The next logical question: Do perceptions about company performance change from minute to minute? No. On the basis of a given set of facts, a particular investor s perception remains the same, though this may not be so for others. Again, if something were to befall the company or the industry in which it operates, if a place with which it is prominently associated were to be affected adversely, or some other factor were to impact the company, perceptions will change. And it is this that influences price from second to second.

Changing perceptions trigger either a buy action, resulting in pushing the price up, followed by a sell trigger at a higher level, with balance ultimately being restored at another point between buyer and seller.

A negative perception would result in a sell action, pushing the price down, followed by a buy trigger from investors, who find good bargains at a lower level, which helps regain lost ground to a certain extent and a new point of balance between buyers and sellers.

Ironically, the price movement by itself generates action from a set of participants known as jobbers or scalpers, who with a very fast movement of fingers on the trading computer and fast reflexes in analyzing the price movements, keep triggering purchase and sell orders in an endeavour to capture the price difference.

The difference is clear then: Those who are part of a consumer transaction in a hotel or restaurant are extremely small in number and have other priorities. So price negotiation, if any, rarely happens. But stock market participants run into millions in number, and bargaining is, for them, a way of life. In an extremely efficient screen-based trading system, the price can remain anything but steady. Hence, the next time you see an ever-changing tariff card of share market prices, think of it as an opportunity, judging the perceptions of those active in the market. There could be a pot of gold waiting to be earned.

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