Cyclic movement of stocks

The above diagram shows the movement of shares in a cyclic form. It starts with distribution of shares i.e. IPO to the general public. After some days there would panic selling by masses, the reasons could vary depending upon the market demand and supply, psychology of the masses and so on. This tendency of the participants leads to accumulation of shares which again is purchased by a few people who may be promoters or the directors who do so, so as to increase the prices of that particular stock. This encourages the mass participants to again buy the stock. The directors or the promoters release (distribute) their shares in the market, thereby earning profits.

Thus we can see that the individual stock prices move in a cyclic form. However, it may not always be the same as there are various reasons for the fluctuations in the price movements of stocks.

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