Question

What determines the stock market valuations? Is a stock’s price primarily determined by the discounted sum of future cash flows, monetary policy, or fear and greed? Is market timing possible using sentiment indicators such as put/call ratios and Investor’s Intelligence surveys?

Answer 1

stock market valuations are primarily vased on demand and supply factors. the fair price of any share is given by its intrinsic value. however , demand and supply factors often result in deviations from the fair pricing causing the share to be either undervalued or over valued. factors such as monetary , earnings announcements , fear , news , insider information etc cause demand or supply push depending on the nature of the news. thus, market price of a security can be said to be determined partially determined by its fundamentals such as cashflow, financial position etc and partially by investors behavioural aspects such as fear or greed.

yes, to some extend market timing is possible by the use of technical indicators such a put or call ratios and surveys.because,they can hint us regarding the demand and supply factors.