Risk factors Associated in Stock Market Investments

Stock markets are absolutely secure, but they are risky for common investors. Risk depends on stocks, which you have selected for investment. There are low risk shares, but there are no risk free shares.

The extent of risk depends on various factors, some of these are:
Individual stocks you invested: Risk depends on individual companies.
In general large cap stocks are of low risk, but small cap companies especially with high promoter stake are of high risk. All BSE 30, NSE 50 stocks and stocks with good brand value compromises of low risk, even they are corrected, have ability to actively rebound.

Choosed sector for investment: some sectors are riskier than others.
Example, Reality and Infra sectors are risky and volatile.
While Pharma, Health care sectors are of low risk.

Time point of investment:
Investment at peak of stock market rallies is highly riskier (as Rally-Correction are Cyclical). Who invested at starting phase of rally gains good profits.
Example, investment at 2008 December Peak returned high risk, paid of huge losses.
Conflictingly, investment on 2009 march Dips is good timing and returned good profits.

Also stock markets are widely effected by global and national economic factors, rumors (for short term only), inflation, commodities alterations, companies quarterly results, industrial production, GDP numbers, economic surveys and reports etc. a lot of factors… All these ‘Market Factors’ when negative to stock markets can be considered as risk factors.

The study of all risk factors, their co-relation among them and with individual stocks, their intensity, future violence they would create, is a matter of complex science.

These are some directions to Tolerate the Risk:
Select shares of bse30, nse50 index. (Especially of brand value).
Avoid low float value stocks.
Follow systemic investment.

But also risk varies, depending on security you bought
Future trading (highly risky)
Options trading (relatively low risk than futures, but high risk than cash segment)
Cash market/direct shares (comparatively low risk than above two)

So always consider the risk factors before investing your money in stock markets, but no fear. Simply follow long-term investments, the best technique to avoid risk.

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