Money Basics · Stocks & demat

Why stock prices move every second

A stock's price isn't set by the company, the exchange, or some formula. It's just the last price at which a buyer and seller agreed to trade. That's the whole secret.

The order book. The market's matchmaking queue

At any moment, every stock has two queues:

• Bids, buyers and the prices they'll pay (₹499.95, ₹499.90...)
• Asks, sellers and the prices they want (₹500.05, ₹500.10...)

When a bid and an ask meet, a trade happens and THAT becomes 'the price' you see flickering. Eager buyers accept higher asks → price ticks up. Eager sellers hit lower bids → price ticks down. Millions of times a day.

So what makes people eager?

Anything that changes what they think the company's future is worth:

1. Results day. Profits beat or miss expectations

2. News. New contract, CEO quits, factory fire, government policy

3. Macro. Interest rates, oil prices, wars, elections

4. Pure emotion. FOMO on the way up, panic on the way down

> Key insight: prices move on surprises, not news itself. If everyone EXPECTS great results, they're already in the price. 'buy the rumour, sell the news'. A company can post record profits and fall 5% because the market expected even more.

Circuit limits, the emergency brakes

To stop manipulation and panic spirals, exchanges cap daily moves on many stocks (2-20% bands, as of 2026, the thinner the stock, the tighter its band), and a market-wide halt triggers if the indices fall far enough in a day. This matters for small stocks: a lower-circuit stock can leave sellers trapped with NO buyers for days, one more way the risk in a small stock shows up as something other than price.

expectations vs realitythe gap every price move is made of

Takeaway. A price is just the last matched trade between a buyer and seller. Prices move on surprises vs expectations, which is why 'good news' stocks can still fall.