The price of any stock is dictated by demand and supply arising out of fundamental micro-economic factors as well as concurrent socio-economic and political issues. So long the socio economic and political stability do not affect the stock market, the driving force behind the price of a stock remains the fundamental micro-economic factors. The main driving forces behind the price of a stock are earning power of a stock or EPS (earning per share), business growth prospect, dividend issues and the news of bonus issue or split of face value of a stock. The gradual rise of reserve and surplus on account of transfer of profit to reserve even under stagnant growth of earning power or EPS can also provide fuel or power to the engine of stock price. It can be shown that rise of reserve content of a stock inflates the book value of the stock and hence the price. Even if earning power remains same or changes insignificantly arising out of normal business operation, the rise of valuation from investment of the company can also infuse blood to the body of the share price. The rise of valuation of asset, in which the company has made investment be it financial asset or real asset, can increase the reserve, the net worth of the company and thus the book value. This is what happened for Tata Investment Corp Ltd.

___________________________________________________________________________________

Keywords: Investment, EPS, Reserve, Stock Price, Micro-Economic Factors.