Who changes the price of a Stock?

One interesting question from a student of the first batch of Pro Stocks Trader.

She asked me

" Who changes the price of a Stock? In real life, when we buy some product of a company and with increasing demand, they may change the MRP of the product. Is it the same scenario in Stocks? Do companies change their stock price? "

My initial thoughts were

" I also had this doubt when I started Trading. This student is going to the basics of market operations and has asked a great question."

My response was

" You have got it right in terms of understanding the demand and supply angle of the story. However, the actual price movement is not controlled by the Company. It happens in the Stock exchange (which you can consider as a huge market) based on buy and sell orders for a Stock."

She asked

" How do people decide what is the right price for buying or selling?"

I replied

" Value lies in the bank balance of the Investors. The basic emotions of Greed and Fear drives buying or selling.

For some, current price of a Stock may look cheap and they think it will rise, so they buy in anticipation of a higher price. For some, stock may seem costly, they sell in anticipation of a lower price."

What do you think about price changes in the Stock Market?

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