# How the price of an equity share is determined?

Suppose an equity share has a face value of Rs. 10. But, in stock market it is priced at Rs 200. Can anybody technically explain how a share price is calculated? It is very simplified to say that it is determined by demand and supply.

How the price of an equity share is determined?

## 4 Replies to “How the price of an equity share is determined?”

1. DAVID says:

RSI = 100 – [100/(1 + RS)]
where:
RS = (Avg. of n-day up closes)/(Avg. of n-day down closes)
n= days (most analysts use 9 – 15 day RSI)

Day High + Day Low + Close
Average Price =
3

Money Flow = Average Price x Day’s Volume

Positive Money Flow
Money Flow
Ratio =
Negative Money Flow

2. vivek says:

Share value is influenced by a number of factors, a main one being a company’s earnings, growth rate, industry, etc. It is of course somewhat speculative.
If 1000 people collectively invested 10 rupees each and started business. After many years the business has grown up.At present this business has a value of 2lakh.
i.e., each persons 10 rupees now become 200 rupees value. now some one who invested earlier likes to sell his 10 rupees share. so somebody will buy it at 200 rupees.
Initial share price 10 rupees is face value.
Now 200 rupees is market value.

Stock price is only a price at which traders will buy or sell.Most stocks are held by long-term investors, LIC, pension funds and mutual funds.Future demand comes when stock options are exercised by company management or from convertible bonds that turn from bond status into shares of stock under certain circumstances. During better economic times, most companies first issue debt. When the stock price rises , the companies discharge the debt by calling it back. When mutual funds face redemption, stock is sold by AMC to pay for it. It is not uncommon for stocks to be undervalued at market bottoms well beyond any intrinsic value. On a daily basis stocks are traded with a constant elegant feeling of earnings potential.
Through BSEIndia Live a trader can make certain strategies on how to invest, when to invest, in which scrip to invest and what is going to be the future of the market.

3. M says: