Since I do not understand the stock and financial markets too well, will somebody kindly explain to me, why are the stock/financial markets so volatile? For example, if there is a slight slump in Reliance petro or whatever company for one quarter, the sensex goes into a dive. Does the same thing happen in US /EU when some component of Dow JOnes or whatever underperforms? Are the stocks really sensitive to long term and true performances by a company or nation or just indulge in knee jerk reaction because the CEO of some company/country pur his/her foot in the mouth?
