When stock prices go up and down, as investors we seek answers. However, it is challenging to make observations, with surgical accuracy, on what drives price movements. Often even professionals are at a loss to explain what moves stock prices. So, as amateurs what can one do to understand why stock prices change?

Here are four drivers of stock prices that you might want to keep in mind:

1. Company specific issues: Stocks represent ownership of a business. The operations, growth and profitability (earnings) of a business fluctuate, based on management decisions, competitiveness of the business and financial strength of the company, i.e., the fundamentals of the business.

2. Industry specific issues: The performance of a business is sensitive to the industry within which it operates. The industry structure, profitability, competition and regulations all affect stock prices of the companies operating in that industry.

3. Economic issues: Businesses and industry operate in the context of the overall economy. In a developing country like India, the economic policies laid out by the government have a huge impact on the future direction of economy.

4. Speculation: This is the X factor. Ultimately, stock prices are determined by what us humans are willing to pay for stocks. Not only is this driven by the demand and supply of a stocks, but more importantly it is driven by our animal instincts of greed and fear that grip us when markets are going up or down.