Easy Stock Basics

your start up here

2011-05-10T23:54:00.000-07:00

Entirely new to stock markets?

Start from here..

Non-financial persons and capital markets.

Previously I not involved in any financial business, can these stock markets are understandable to me? Is it possible to me to enter?

Simply tell what Stock Markets are?

With eager to enter I referred so much, its really confusious…no one told me in simple what they are? Can u?????

Easy stock basics: How stock markets are personally useful to me?

Stock markets are useful to companies and large businesses, then how they are useful to my personal account?

Basic stock market concepts: What are shares?

Ohhh! Large definitions, complex explanations..can u tell simply told what these are…

Who can invest in stock markets? Average persons?

Is stock markets are confined to large personalities or average persons like mine can also eligible to invest in stock markets?

Minimum Investment Needed to Enter Stock Markets

Is large amount is required to start investing? What is minimum amount required to start?

Is my Money Secure in Stock Market Investments?

Heavy transactions, involvement of brokers…I have a doubt, is my investment secure in stock markets?

Risk factors Associated in Stock Market Investments

I always hear in news channel ‘Today stock markets fall’, is the investments in that are very risky? What are risk factors entirely associated at it.

What’s necessity to invest in stock markets?

We have banks, mutual funds…then what is necessity to invest in stock markets?

Can money doubles with stock market investments

My friend says his money was doubled within one month, is it true? I want to invest now. How much time I hope to double my money?

PAN card, Bank Account primary to enter markets

PAN card and good bank account are primary necessities to enter the stock markets.

DEMAT and Trading accounts

What these are? Is they needed to start investing in stock markets?

its not complete there is a lot to know more...through this blog.

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2011-04-11T22:59:00.000-07:00

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2010-05-10T23:50:00.000-07:00

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PAN card, Bank Account primary to enter markets

2010-05-10T23:48:00.000-07:00

Now, if you decided to enter stock markets the first access is having a pan card.
Pan card means ‘permanent account number’, it was issued by income tax department. it is to handle tax escapers as all the profits getting in stock markets are subject to tax deduction. Hence according to SEBI regulations PAN is must precondition to invest in stock markets (in any securities).

The application forums of pan card are available at brokers, financial advisers, Internet centers etc. Apply with adequate proofs of bank account, address proof, photo identity. Approximately within 20 days pan will be posted to address we mentioned during application.

The next is having a good bank account; your savings account is just sufficient for this. But confirm that your bank account offers chequebook, online transactions account, and etc facilities. Its also better if the bank offers Demat account itself at reasonable prices. Its better to have a account on local branch of bank for your brokerages, this facilitates flexible transactions of cheque deductions etc.(in fact the bank having tie-up with your brokerage is much more preferable)

Can money doubles with stock market investments

2010-05-10T23:47:00.000-07:00

Yes, it’s very easy to get money doubled within short period in stock markets as return on investments is very high, but in how much period we shouldn’t think off.

Stock markets gives good profits may be more than doubling. But never invest with that targets with time period like ‘I am investing in stock markets to make my money double in 2 months’, ‘Advice me best stocks that double within 3 months’. My advice is not to set targets for your returns while investing.

All the returns depends equally on the ‘Market Conditions’, your invested ‘Company Performance’, ‘the Sector to which company belongs’, nothing more than these…
Picking a ‘Right stock’, operating in ‘Right sector’ in ‘Right conditions’, gives the satisfactory returns on our investment.

Some small cap company stocks grow by more than 20% in a single day in stock markets. But also there are many cases where stocks grow by more than 50% within 2-3 days. But expecting and timely catching those stocks is not an easy task.
For example, some leading small cap companies announce exponential profits during its quarterly results announcement. Then its share price outperforms, it may grow by more than 20%. But it’s not easy to approximately expect the quarterly results of small cap companies.

Below are some outlined guidance’s for higher returns:
Generally shares in sectors Information technology (IT) and Reality are very volatile, they grow more than others in bull markets and vice versa in bear markets.

Generally stocks of Small Cap Companies give good profits than large cap and mid cap stocks. But much more care is necessary while picking small cap stocks.

Expecting the quarterly results of companies and investing before announcement.
If results reach expectations stocks outperforms.

Investing with clues ‘for a sector’ or ‘individual company’ or of ‘general market clues’.
For example,
Company clue: Investing in a pharma company, that FDI may accept the drug in pending. Or ‘expectations on patents of pharma companies.
Sector clue: Investing in railway stocks, with clue of benefits for railway companies in railway budget announcement.
General market clues: With vast positive expectations during GDP, IIP numbers, packages, RBI Reporates, budget announcements etc.

Conclusion: Definitely your money doubles in stock markets, if you followed a right way. But not enter with that type of greed expectations.

What’s necessity to invest in stock markets?

2010-05-10T23:45:00.000-07:00

What is the reason beyond to prefer investment in stock markets, why not to continue in banks or mutual funds?’. Below are suspected reasons why it’s always preferable to invest in stock markets, over traditional investment options.

Compared to stock markets, growth of money in banks (with simple interest) or mutual funds (where fund company shares some profit) is very less.
Growth of money by gaining good profits is very faster and higher with stock markets.
With savings on banks we need to satisfy with just interest (of 8-10%) on fixed deposits.

Mutual funds perform at an annual rate of 25-30%. But it’s possible to gain above 100% annual returns only with stock markets. Some small cap stocks even double and even triple within one-year time elapse.

Another demerit with banks or mutual funds is lock in period, where our money locks up to completion of fixed deposit period or maturity of a close ended mutual fund. Fixed deposits and many mutual funds even not offer tax benefits. But shares can be bought and sell at any instant we desire.

Another factor is Inflation, which if once entered the orbit outperforms bank interest rates. For example, just before recession inflation rocketed to above 12%, where bank interests stayed below 10%. So in actual we are losses by 2% by saving in banks. To tolerate growing inflation (life expenses) we should invest in stock markets or gold.

There is no entry load or additional charges, for stock market investments (only minor brokerage and transaction charges) like mutual funds with hidden charges.

With stock markets we directly get the Dividend from companies, the additional profit apart from increased share price.

Trading of shares is much more easy than mutual fund units, with outcome of online trading.

We have wide range of companies from various sectors available at optimum risk, unlike in mutual funds where the fund itself offers pre-lined sectors or companies.

Wide range of data is available to analyze stock companies, where relatively less data is available about the fund.

In mutual funds, public gets no vote or right either to influence investment decisions or demand of dividends, where public have rights in stock companies.

Even mutual funds never compete with stocks in returns, they equally corrected to shares during the last recession.

Conclusion: It’s always better to invest in stock markets due to its huge benefits over mutual funds or bank savings.

Risk factors Associated in Stock Market Investments

2010-05-10T23:44:00.000-07:00

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.

Is my Money Secure in Stock Market Investments?

2010-05-10T23:42:00.000-07:00

Absolutely, invested money in stock markets is 100% secure in stock markets provided your stockbroker or brokerage is a SEBI registered.

A Stockbroker should be SEBI registered. SEBI follows strict regulations regarding the security of money in Demat and Trading accounts. Also as the technology using by stock exchanges is very fine, no way of fraud in money transactions with Demat accounts.

So, before openings demat account confirm that your broker is SEBI registered. Also remember, there is no need to give any direct cash payment to broker cash trading account, instead always give in the form of cheque or D.D form, which are much safer form and no chance of any misuse by sub-brokers.

“Here readers should not understand the security of money as risk, which is a different concept that always exist in stock markets”

Instead of all these security labels, unfortunately there reported some misshapes on money transactions between stock trading accounts. Its best fit to use the word “Technical Mistakes/Errors” for this miss-happens, instead of ‘fraud’ or ‘misuse’. Online platform is source of many of these technical mistakes.

Some examples of these are:

Missed-orders, wrong orders or order cancellations
Your money may harvest in orders that you may not be placed actually. These are due to technical errors or technical incompatibility between exchanges and brokerages. But many brokerages are resolving these mistakes within 15days you may also complain about this type of issues in sebi official website.

Problems with online passwords:
We should work with extreme care while entering and saving online account passwords, and to change them timely. Indecimate use of online passwords would result in heavy misuses. It’s always preferable to work with your online trading account on own pc. But it’s not a big problem as many brokerages allow money transfer from trading account to single bank account only (that is registered with trading account), so that even third persons that know your password cannot able to transfer money to his account.

Conclusion: Money in trading accounts is absolutely secure; cases of misuse or technical mistakes are very very minor.

Minimum Investment Needed to Enter Stock Markets

2010-05-10T23:41:00.000-07:00

“Stock markets needs no specific minimum amount to enter, so it’s possible to start your investments, no doubt with very small amounts of money”

Only practical unit is to buy a single share. Buying of fractional number of shares is not possible.
E.g. Buying of 2.5 shares not possible
1, 2, 3,4…only possible.

So anyone can start their investments in stock markets by buying atleast one share, of course there are different shares in markets ranging from below one rupee to more than ten thousand. Hence theoretically it’s possible to enter investments in stock markets with a single rupee.

But this is not the case with all the stock brokerages; some may fix their own minimum amount. Many brokerages cannot accept amounts below 1000 rupees, also transactions pause when the balance is reached below 1000 rupees.

Lacking of minimum amount is an immense advantage to investors. That’s we start our investment with small amounts first, then after better expertise we make our full sized investment. Thereby avoiding the losses by lack of experience during our initial practices. Most of mutual funds have atleast 5000 rupees as their minimum investment and also we share our profit with the mutual fund company. Also they are preferable than other investment options like gold (requiring atleast 1gm buy), currency futures (1000$) or other commodities having their own minimum amounts.

But, how much you invest that much you profited. But its best to start your stock market investment career with a start amount of 5000 rupees minimum.

Conclusion: Stock Markets have NO minimum amount must required to invest, But arbitrarily its better to start with atleast 5000 rupees. Hence always prefer stock markets for your investments and make better.

Who can invest in stock markets? Average persons?

2010-05-10T23:40:00.000-07:00

“Always new investors have one doubt; can stock markets are suitable to me? Because amount I can able to invest is not a huge. But in fact stock markets are very useful For Small Investors, as they support very small amounts even less than minimum amount required for mutual fund investing”

Anyone can invest in stock markets, by buying the shares of companies. They are never confined way of investment only for large investors. The simple requirements are small amount required to buy atleast one share we are favoring and transaction accounts (Demat and Trading accounts)

We observe many persons who think of stock market are not for normal people. Also they think, persons investing in the stock markets are so rich. But it’s not the real case, because stock markets are available to all. But also investing in stock markets is so simple if you have Demat and trading accounts, it’s only telling your broker which shares to buy.

In fact, the primary Aim of Stock Markets is to Make Involve Common Public in larger companies. All the Public financial corporations, Mutual funds are only to facilitate indirect investment in stock markets for people who not much known about it.
Even there are certain arbitraries in front of SEBI on fixing certain minimum amount of stake holding by common public (retail investors) in all companies.

Conclusion: Any average persons can able to invest in stock markets, starting with small amount of money having.

Basic stock market concepts: What are shares?

2010-05-10T23:39:00.000-07:00

“They are most associated terms with stock market investments. We do either buying or selling i.e. trading of shares based on the performance of the stock companies”

The aim of many companies is to attract even the small investors to invest in their company. But company worth’s crores of rupees, so not possible for small investors to invest that larger amount. Hence the total value of the company is divided into small divisions, called shares.
For example, if the value of the company is 50 lakhs. The shares equal to the 50 lakhs rupees will be allotted by the company i.e. 5000 shares each of cost 1000 rupees. (Companies specify price range to their shares based on their desire, but total value of shares should be equal to the total value of the company). Anyone who is impressed by the performance of specific company can buy its shares from stock markets at price they are currently trading. If company of which you bought shares is performing well and getting good profits, company value rises and ultimately shares prices increases. This is based on the demand and supply rule. Hence of buying right company shares is a logical art, which make you good profits.

The owners or who are part of company management and holding large number of shares are called promoters of the company. Promoters and other shareholders of the company, who are part of the company decisions, are restricted to trade their company shares in stock markets (can sell/buy their shares only with adequate information supplied to the stock exchanges).

Only the shares that are sold by company owners on the stock markets are available to trade by public, this is called as open market. Investors should buy shares at the fixed price range by company, if it is newly listing in stock markets (through IPO). But once listed in stock markets the price of shares changes basing on performance of company and investors can buy shares at the current market price (CMP).

Companies have a right to make desired changes in the shares i.e. they can split or bond shares or can issue bonus shares to their shareholders, provided the total value of the company will not changes. For example, company can split its share pricing 1000 rupees into 2 shares each valuing 500 rupees or can bond two or more shares into one valuing accordingly.

As the shares are a part of the company value, hence they are often called as ‘equity shares’. Equity shareholders (who buy company shares) can demand the company regarding various aspects of their business. And even can change the management of the company, if have 51% of the total shares in your hand. Hence companies generally hold more than 51% of shares and sell some percentage of shares in stock markets to public holding. The shares that are trading on stock markets for public holding are called free float shares (free float value of company). For example, 90% of company shares in promoter’s hand, only 10% in stock markets, so 10% shares are free float shares. All the shares we are buying on stock markets are free float shares. Even though only some shares of company trades in stock markets, the value applies to all shares of company. The total sum of value of shares calculated by their market price is Market Value Of The Company.

How stock markets are personally useful to me?

2010-05-10T23:37:00.000-07:00

“Stock markets are useful tools for companies to get money for their business, then how can they are useful to me personally?” especially for common investors how they are useful?”

India, being a developing country the economy is growing at a faster rate. Only way to participate in this race is by “Investing in stock markets”. To participate in the growth of the nation and to make profited equally stock markets are useful for every individual.

Today you may be a middleman or somewhat rich, but after some years you definitely become financially poor if you stay out of this race, especially if you are a non-business person.
So Stock markets are not a useful investment tool, but “Must Essential” Investment Practice.
You may not be running a business, but how to participate in the fastest growing business and companies in India, by investing in stock markets. The companies, which you are invested, are doing business and sharing the profits equally with you. How nice…profits without participating in business, just by buying the shares of that company.

For example, companies like Infosys.
Once upon a time it is a small software company. But later by software boom it had grown very fastly. The people who invested in that are benefited hugely by its growth and profits without even knowing what business it is. So, They do business for all (for company and investors).

You may invest in the India’s largest companies, by buying the shares of that company.
Can you think off the Oil Refinement Business, or Car Manufacturing or becoming the starting the business of Telecom services with relatively small amount of money you have, never…. but, yes you can do…how?, with the investment in stock markets.
But its not direct, you need not to do that any business operations. But equally get the profit from the business.

How can achieve this? Suppose if you are invested in reliance industries limited by buying its shares, now you are a part of the company business. You are doing indirectly the oil refinement business.
Likely similar in any big companies like Tata motors, Airtel or any….
Being a partner, by investing in good company you get good profits both with increased share price and any dividend offered by the company.

Simply tell what Stock Markets are?

2010-05-10T23:36:00.000-07:00

“When I try to understand about stock markets, every one answering it in a complex manner. Tell me in simple what actually stock markets are…”

Every company wants To Expand Their Business And To Make It Larger Company. For this step companies needs money. The money reserve of companies is not sufficient for this. What they can do in these situations?

Simply two ways before.
Not expanding, staying where they are.. (Or)
Selling the company.

For this second step stock markets are working. Companies’ Can Sell Some Percent Of Their Company In Stock Markets and gets money. Any one can buy the company who want to share the profits earning by the company from stock markets. Here the buyers are stock market investors.

Below example, clarifies you this…

Suppose, you have a four big hotels in mumbai (worth Rs.40 crore). Now you want to expand the business to some more areas in India, suppose to Pune. To construct a new big hotel in Pune it needs atleast 20 crores. Who can give this money?
Can you wait until you get 20 crore profit on your mumbai hotels or take a bank loan…..?
Here’s a simply way to get money, than above difficult steps. The stock markets!
List your mumbai hotels group in stock markets, for 40 crore business you get 40000 shares each of Rs.1000/- cost. Sell the 20000 shares in stock markets, you get 20 crores. Simple..
But now you have only 50% right on your company. You should equally share the profits getting from hotels with the persons who bought your shares.

That buying of these shares is called “Investing in Stock Markets”.

Who buys the shares of good companies get good profits…

So stock markets are centers, where
“Someone needs money for business.
Someone gives to him” after they equally share profits (of course, loss also) getting on their business.
Here who needs money are the companies
Who gives money are our self…stock market investors

From stock markets anyone can buy the shares from any company, starting from a single share. So even common people can invest in big companies like Reliance, Tata etc and equally get profits from them. Stock exchanges (BSE, NSE for India) are middle mans between the companies and people, that safely allow these financial transactions.

Can the article tells you what are stock markets? Comment..

Non-financial persons and capital markets

2010-05-10T23:35:00.002-07:00

“Even though interested in stock market investments, I am not from financial business field. Can the investment terms and patterns used in stock markets are understandable to me? Is they are easy to learn by non-financial persons?”

For understanding about the stock market investments, you need not be a person in financial field. All you needed is interest to learn. When you spend a little bit of time regularly, they are quite easy to understand. Starting from basics, every step in stock markets is quite simple. In fact, most of the investors profiting are not from financial field. The techniques followed in stock markets are unrelated to finance, but they are completely logical.

The steps to understand is to clarify common doubts like “what are stock markets”, Basics, then how to start investing, next of is about the selection good shares, then understanding how to follow different strategies and techniques to increase profits in stock markets. All these are mostly unrelated to financial terminology. But the understanding of simple basics and terminology of stock markets is helpful to regularly follow the business and stock market news, unless they may not be understandable to new non-financial persons.

Also many magazines and business papers are now guiding which shares to buy, basing on the market situations and fundamentals of the companies, which makes the stock market investments quite simpler without burden on investors, to completely analyze the companies they want to invest.

Conclusion: stock markets are understandable and easy to invest for persons from any field.

General useful tips for Indian stock investors

2010-05-10T23:35:00.001-07:00

You may be invested only after the detailed enquiry of that company but it may not maintain that thought the years so it is needed to maintain the stoploss for every stock at definite level based on your investment either long-term, short-term, near term.

It is also required to maintain some target levels for every stock, as they are resisted by these levels and able to bounce from these levels.

Your type of investment should be changed based on the expected charts that may be possible.

It is always necessary to expect the market with a global eye.

Everyone wants to make maximum profits on their investment, but we should adjust our expectations of profit based on our risk facing ability

It is very necessary to prior investigate about that company and field before investing in small cap stocks

If you are not able to face the risks in market it is better to invest in best dividend paying stocks rather than large price gaining stocks

The Three Best theories of Stock Market

2010-05-10T23:33:00.000-07:00

It is not possible for a common investor to track or to alter the market movements. The change takes place for every minute, and even the experienced market analyst cannot track the market changes, and for small investor it is a very difficult phenomenon to analyze market.

Always the looser in the market is small investor; the large investment groups can able to tolerate any large crisis with their huge investment and large data available about various companies they invested.

But I am giving some fundamentals so that every one can basically understand about market and may avoid the investment failure:

1) Rotation theory:
considering the last 30 years experience the market changes can be divided into cycles, each cycle ends with a large raise and deep possible bottom. In the last three decades the market forms 6-cycles each of 5-years. They are 1978-1983, 1983-1988, 1988-1993, 1993-1998, 1998-2003, and 2003-2008. So the market is going to its peak for every 5 years. So we should invest at 1st or 2nd year of a cycle and make profit at either 4th or 5th year.

2) Opposite investment pattern:
The large winners of the market like buffet and Templeton follow this rule. There winning is not a big secret, it is simply thinking opposite to others. When all are fear of market and investment, they make investment and when all are entering into market with good hopes, they sell their shares and make profits. Investors following this rule never made loss in market.

3) Market PE:
Most of the small investors are entering into market just before the fall and they are making heavy losses. Market-PE can be used as a device to know the exact point to invest. Considering the last 30 years the market never goes below the PE=10 even it is going below it, it is strongly rebounding above 10 PE and reaching maximum of 25 PE. So we should invest around the 10 levels and sell around 25 PE.

Our country had the second financial system that is rapidly growing in the world, for every 6 years our financial growth is nearly doubling, if it continues like this we may achieve GDP of 30 lakh crores dollars in 2038. For this market capitalization should be 50000. So our BSE-sensex may go to 50000 mark in near future. So its wonder time for long-term investors to invest at any time present now.

Working with Demat and Trading Accounts

2010-05-10T23:32:00.000-07:00

Trading in the stock markets is not possible without appropriate Demat account and Trading account, they are electronic or digital forms of your stock market securities, all the shares/securities you have brought or sold is done only with your Demat account or trading account. Unlike the earlier forms of trading in stock markets they offer much security and easy trading platform.

Opening Demat account:
The first step to open a demat account is getting a pan card, along with the appropriate bank account, cheques, address proof’s and applying for demat from a near by stock broker.
After applying for a Demat account the process completes within 4-5 days, you can also apply for a Demat account in online on website of your choice stock brokerage. While applying for a demat account should be very careful about signatures all signatures on your pan card, application, bank cheques address proofs should match.. Opening a Demat account with an good bank account having cheque book, online transfer, mobile transfer facilities is preferable even through, they are not essential for your demat account, they facilitate an easy way of trading and transfer between your demat, trading accounts and bank account. Most brokerages are opening Demat account at a cost of Rs.500/-. After opening of Demat account apply for trading account.

Trading account:
Within one day of opening of demat account you will got trading account if applied, the trading account acts much like your original demat account, it is just a easy user friendly facility created by the stock brokerages. Opening a trading is no risk but also faster all the work is done by your stock broker, generally it is opened free of cost, but Stock Exchanges or SEBI does not promise any security to your money in trading account as it is completely related your stock brokerage. Almost all trading is preferable through the trading account (expect long-term investment where demat account offers good security) the trading account offers
Facilities like:
“Easy trading without any relation to your demat account
Displays your account details instantaneously
Updates of the intraday, delivery margins.
Displays any messages you are getting from your brokerage (E.g.: stock tips)
Facilitates the online transfer and online trading in the stock markets
Easy trading by your brokerages without any signatures by persons, i.e. trading can be done by broker with a simple phone call.”

Now you are eligible to start trading in stock markets, you can also take sophisticated webtools for faster and convenient trading.

Online platform:
If you want to trade in shares without our stockbroker, you can! Using your stock brokerage website, login. And access using a user-friendly trading platform. What you need for this is opening an online trading account. Most brokerages suggest this at the time of opening trading account. But much care should be taken while trading using your online account, because putting a wrong order may leads to heavy losses in shares. So only trade with the guidelines of your broker first, and then trade 1 or 2 shares until you got necessary to access to online trading account. But trading using wifi or from Internet cafes is less preferable as they not provide enough security and less speed. Quoting in the order column is preferable than using in the market column as the alterations in your Internet speed may sell/buy shares at different prices. But also using installed trading software gives more security and speed than using the brokerage website.

Recently, Some brokerages like reliance money had launched mobile trading platform for its users which uses the Gprs enabled handset for its trading in shares. But, in fact SEBI is not permissioned the brokerages for starting mobile trading, as it is received many complaints in countries like u.s. but launching a mobile trading platform by avoiding all technical problems and at much faster, be definitely a boom to stock trading as in the conversion from the paper documents in trading to electronic trading as the mobile users in the Indian is far more than the internet users.

The Best Time To Start Investing in markets

2010-05-10T23:30:00.000-07:00

Every day. No doubt is a best day for investing.
But always remember these three fundamentals:
- Never invest all your money at a time in markets (instead follow sip)
- Start investing as quickly as possible.
- Keep your investment in market as long as possible.

Accumulating earned money and investing at a time in market is never preferable; can you tolerate if market suddenly falls just after you invested? So regularly invest you money whenever available, following systemic investment pattern.

Never wait expecting good days in market. No one can analyze before a good period, but all came to know it’s a good period, after the game ends. Staying out of market is really a loss in these cases.

Long-term investors, who taken back their investments even in recession period had also with good profits. Because “ loss by bears” is very low compared with “ profits by long-term bulls”. So keep stay long in markets as far as possible.

I think you understand what’s the real importance of the investing as quick as possible, if analyzed these fundamentals under depth. So start your investment today… Now…

Short Selling and Short Covering Of Shares

2010-05-10T23:28:00.000-07:00

They are stock market techniques in an intraday session useful to achieve good profits rather than simple buy and sell of share.

Short selling is selling of shares according to CMP (current marketing price) in a intraday market, that actually we not bought or holding.
Short covering is the actual buying of shares in markets to sustain the sell units that are virtualized before.

Traders do short selling, when they expect a downfall of stock prices. Hence heavy short selling is followed by a bear stock market and the share prices presumably decreases.
Short covering indicates a positive sentiment in stock markets. Hence a strong bull rally may occur in stock markets.

The following example illustrates how being profitable from short covering from short selling and short covering:
- Traders expect a fall in stock markets.
- He sells 1000 shares of X company at current marketing price of Rs.100/-, that we doesn’t actually bought.
- As expected market falls.
- Assume the CMP of share price is fallen to Rs.70/- and booked profits.
- His profit is 100-70 = 30 per share. Final profit may include brokerage charges and other expenses.

But always short selling and short covering were not possible in cases like:
- Trading volumes are far less than our margin available.
- Large percentage of share re holding by promoters.
- Floating vale of shares is very less.

For the above instances a new term “Renting” of share is illustratable. Where a trader rents the share from holded persons or companies, he short sells the share and at final session short covers. Finally he handover the rented shares along with little rent or interest to respected investors or company.

Below are the available options to rent or borrow the shares for short covering:
- Mutual fund houses.
- Insurance companies
- Company promoters
- Long-term investors.

Volatility in market and Volatility Index

2010-05-10T23:27:00.000-07:00

Volatility Indicates harvesting away of liquidity from the stock markets, leading to a bear market. VOLATILE the term means TO EVAPORATE or gone away. So any market where obvious taking back of investment happens is a Volatile Stock Market.

Nifty And Volatility Index:
Nifty has introduced a special index to represent it in quantitative manner called as Volatility Index. Principle behind evaluating it is Number Of Retail Investors In The Market. The more the retail investors the more will be the volatility index value.

High Volatility Indicates Disinvestments:
Higher volatility index values above 50 points and strictly continuing above it for some trading sessions indicate short term steep fall in stock markets. Above 60 levels are conscious signals to start disinvestments from stock markets.

Anyhow, volatility is very considerable obligate factor effecting the belief of investors in financial markets, as its ultimate consequence is a bear phase.

Observe Trading Volumes while buying shares

2010-05-10T23:25:00.000-07:00

Trading volumes are not at all consideration for many Indian retail investors, only during buy order of Risky Shares or Small Capital Shares traders are recognizing its Importance. But trading volume is obligate substantial factor, particularly for Day Traders
Number of Shares Exchanged through exchanges (both buy and sell confirmations) is called as Day’s Total Trading Volume.

Trading Volume Depends on various aspects like
- Total capital, free shares of company available.
- Activity Promoters and Chief Stakeholders of Company
- Investors’ Interest on that company shares.
- Any news or rumor about the company.

Negative Hint Of Trade Volumes:
A negative news precluded with very large traded volumes indicates rapid vanish in share price and vice versa. For example after scam Satyam computers, more than 90% share value vanished out with immense trade volumes never seen before.

Caring While Investing In Low Trading Volume Shares:
Investors should take utmost care while buying very low trading volume shares. Suppose an example, if you bought 3000 SHARES from an industrial company X. considering Trading Volumes as 1000. Then, you must stay for a lot of trading sessions to sell your shares. Hence investing in this type of shares is never recommended nevertheless in a carefully analyzed trusted company with maintenance of good balance sheet.

Investing Based On Trade Volumes:
Investing based on trade volumes analysis includes buying of shares whose Value is Either Constant Or Little Rising from many trading sessions along With Continuous Adding Up of Trading volumes. For Intra-day Market Investors observing of trade volume grids is best way of analyzing Intraday and Short term market progress.

Dividends will allotted for shares and funds

2010-05-10T23:24:00.000-07:00

The Profit Gained by the companies generally Shares equally to their Promoters and Stakeholders in the form of Dividend.

By Investment Companies Or Mutual Fund Houses:
Listed stock market companies declare dividend on Face Value of their shares, while mutual fund dividend depends on both profit achieved by the mutual fund house and dividend delivered by their investment companies.

Declaring A Dividend:
A good fundamental company always shares gained profits equally to investors as Regular dividends. Dividends Are The Actual Earnings On Shares. But a company may or may not provide all its profits as dividend. Remained profits of companies are useful for some other Expansion Plans, Takeovers, or Other Miscellaneous expenditures.

Investment For Dividend:
Point Investment Never Work for dividend gaining, as no one knows when respective companies announce a Dividend. Unfortunately in Indian stock markets many Best Dividend Stock companies are Inactive and repellent shares for intra-day and short-term traders.

There are no ruled out shares named for regular dividends, but stock like CASTROL OIL is best example of Dividend Yield Stocks.
For shares dividend adds directly to Trading or Demat Accounts. For unit holders, based on fund either it automatically used to buy units or obtains as a cheque to your postal address.

following systemic pattern for your investments

2010-05-10T23:23:00.000-07:00

The Timely (periodic) Investment of Total capital without accumulation at an occasion in stock market shares or mutual fund units (or any securities) is called as Systemic Investment Strategy. Currently, Systemic Investment Policies (SIP’s) are gaining importance which pattern also works Best in Shares.

Time As A Key Factor Of Investment:
The value of Time in Investment is a Key Factor, But Systemic Disrupts some valuable time, Then how systemic investment is recommended? Considering an example of Recession period, where investors are losses crores of rupees in their shares invested far before or just before that point (some financial months) of recession. One that invests all portfolio before recession victims high, while those systemic followers invested a part of total capital risking less and ultimately losing less.

Saying another way, Systemic Traders Are Conditional, although they are not perfect Analyzer’s or Super experienced investors. Because systemic technique it-self follows different analysis strategies and experiences.

Its Not Risk Free, But Risk Tolerable:
Systemic investment is not risk free, but makes player of its risk tolerable, one of the requirements in stock markets investment. Even larger players of Investment Companies also solely follows systemic investment pattern.

Different stock Sectors in markets for Investment

2010-05-10T23:21:00.000-07:00

Shares belonging to different sectors are available to trade in stock markets. Diverse investment strategy within stock markets is Trading In Companies Belonging To Various Sectors.
As “Bad news for stock indices is not a bad news for all sectors”, this pattern greatly declines characteristic risk in stock markets. So it is an important approach of investment for funds and small players.

Sectors And Diversified Investing:
Sectors like Reality, Banking, FMCG, Oil and Gas, Infrastructure, Capital Goods, Pharma, Information Technology, Automobile, Entertainment are important categories for investment.

Considering the Recession and Stock Market Crash occurred in 2008 among world stock indices, the sectorial diversified investment furnishes less losses compared to single sector investment practices.
For example, the reality shares are worse effected sectors, compared to many other sectors. While the health based sectors are fascinators with modest losses. Here the diversified sectors investment guard from utmost losses.

A second aspect:
Visiting positive side, a sudden Economic Issue may show no effect on all sectors except one that acquire profundable benefits, again the sectorial investment strategy yields maximum profits.

Sectarian Portfolio:
The next is How To Divide Investment Portfolio Into All Sectors? Can I invest in Variable Ratios or on Equilibrium Ratios in the midst shares of selected sectors?
My suggestion is to follow Ratio-Based Investment according to future analysis and total capital and expected future capital of choice sectors. Then next step is to invest according to analyzed portfolio, making an Equi-Balanced Diversified Sectorial Investment.

Also risk appetite investors consider Single Sector Investment Pattern posing returns of Either Sided (Good profits or high losses), this strategy greatly reduces risk of investment while treating with a Defensive Sector. For example, Investors of Banking, Pharma Or Health Care were superiorly defensive in reducing risk; also the returns are less compared to investment in other sectors.

On Observation Some Sectors Best Performing, Why Not I Invest Only In Shares Of Those Sectors? Surely, But “Today’s Best Performers May Be Future Worst Losers”, No one expects. Hence always follow a Systemic Investment Pattern in all appropriate sectors as my final justification. Stimuli given by single share of particular sector can able to drive up all the sectorial shares. For example, a Good Quarter Results Announced by Infosys can stimulate a Rally in all IT shares.

Analysis of markets with technical factors associated

2010-05-10T23:20:00.000-07:00

Expecting the movement of stock price or stock market movement with the past experiences is called as technical analysis. Simply, it is possible or probable stock market movement more considering the past happening rather than present conditions.

For example, Expecting The Market Movement On A Particular Month By Technical Analysis Poses To Consider Atleast 10 Years Stock Market Movement Data On That Month, Finally Concluding The Average Or Most Happened Event Is Almost Repeatable That Month Of Present Year.

The Limiting Factors:
Technical analysis works many times, but entirely difference conditions under the Analyzing period acts as big limiting factor for the technical analysis of stock markets.
Another limiting factor is FII Trend Cannot Reflect The Market Technical Analysis, as they more prone Global Situations.
Theories Of Stock Market are assumptions of past, but also Technical analysis. So what’s the distinguishing factor? But the theories are pure experience based assumptions with evident of some success or failure. But analyzing also based on present situations along with highly probable expectations.

Technical analysis reflects intra-day and short-term market movement, but theories are long term market predictions. Technical analyzing changes time to time, but stock market theories are valid for long time intervals.

Technical Analysis And Outcomes: The technique technical analysis works superlative in many cases and in some special predictable sessions, but exceptional cases may be Sudden Crash Or Upper Circuit Sessions where technical merely fails.

Also the technique works mostly in cash rather than in future and options. Technical analysis based on chief considerable current factor, as Volatility Index forces a good success rate.

Our final suggestion is to trade according to your unique trading strategy, Technical analysis may a part of it. But never solely depend on it. Considering all possible factors, according to their Intensity Ratios to alter stock markets will regret a real success with technical analysis.

Institutional and retail investors effecting markets

2010-05-10T23:18:00.000-07:00

Above are Diverse Categories of investors, the Major Achievers of Indian stock markets. Their liquidity levels are almost equivalent, but effecting markets in different ardent ways.

Institutional Investors are large players in stock markets with financial supplementary basis, simply Able to Drive Stock Markets. The typical examples are Mutual Funds, Financial co-operations and Individual persons with good liquidity. If these institutional investors are of foreign they are called Foreign Institutional Investors. They are specially registered allowable institutional groups by SEBI.

Domestic Institutional Investors are Indian Mutual Funds or Insurance Policies investing in large amounts in stock markets like the LIC OF INDIA, UTI, ICICI, PARIDAS, RELIANCE, HDFC etc. They may be of governmental organizations.

Retail Investors are small Domestic Individual Investors with relatively small amounts of free liquidity. But, as all they constitute major group of investing category enforcing as liquidity as that of institutional investors.

But the Strategy Of Investment, Capability Variations, Aims of these categories are completely variable to each other category.

Retail investors had No Complete Concord, No Enough Familiarity, and Knowledge in financial markets. Most of they follow Stock Tips, Fii trends or some other services. Their network is Randomly Concentrated to either of Institutional Investors.

The foreign investment groups (FII”S) Follow A Different Strategy from domestic and they are highly risked, more regulated liquidity on global and own counties economic conditions. Mostly, Drive Stock Indices With Their Risky Future And Optional Investments.

Contrast, to foreign investors are domestic investors, even they have a hefty buying supplementary as Fii’s, but they never be only alternators of stock indices either on intra-day or long-term as they lack risk and more concerned with simple buying of shares in cash segment ultimately performing at no intense response for their investment strategy.

But in sense it is essential for an ideal stock analyzer to consider apart from global conditions, is Buying Power And Strategy Of Different Investment Groups of Foreign Institutional Investors, Domestic Institutions and Retail constituent Investors.

How Sentiment factors affect stock market indices

2010-05-10T23:17:00.000-07:00

Most of fluctuations lines we observe in Intraday or short-term market movement graphs of stock markets are nothing but sentiments of crores of share investors.

Sentiments Drove Stock market Indices:
As investors in stock markets is finance related issues traders are droved by both fears and greed. Most situations cause more conscious than real situations.

Rumors, the worst market terms inducing an intense downtrend in a specific stock or on the whole index. The Rumor is a Negative Sentiment Factor. Even it is not confirmed or even condemned by organization or company downtrend continues to fluctuate. Here the negative sentiment was strongly enforcing the minds of stock markets investors.

Opposite to above situation is the post election story, after UPA government completely in central government without left parties, made market traders displacing from positive sentiment to heavy positive sentiment plus crowd behavior plus higher greed all make markets to touch upper circuits.

Sentiment Issue Mostly Concerned For Retail Investors showing characteristic crowd behavior sometimes effect markets far beyond from actual stock market and economic position.

GREED AND FEAR are different terms from sentiment. Sentiment reflects near to actual situation, but also a technical pattern of investment.

India Traders And Sentiment:
In countries like India with investors of little or no knowledge on basics of stock markets, structurally sentiment completely depends on Fii’s outlook, funds marginal investments, and most brokers’ analysis.

Long-term view and investment:
But in justification, sentiment effects on long-term markets are negligible as company’s fundamentals not change daily like investors sentiments. So complete sentiment based strategy investors are likely antagonized for long-term investment.
In fact sentiment means belief which is an indirect term appearing likely unrelated to either stock markets, economy. But a major limiting agent directing stock indexes.

Finally sentiment alters stock markets, economy ultimately investors, but in an complex, interrelated, indirect fashion. Study and clear analytical based investment on it is likely more tedious, but huge profits with minimum risk

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2010-05-10T11:51:00.000-07:00

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Correlation between Economy And Stock Markets

2010-05-10T07:31:00.000-07:00

A Mutual Correlation is well existed between the Economic Factors of country and fluctuations in Stock markets. Any intense factor influence both economy as well as stock markets.

If a news analyzing how economy was gradually breaking down, why not it can arise fears in the stock market investors, same reason leads to disinvestments their share holdings and exercising option calls tendering a correction in stock markets.

Likewise Volatility and Continuous Corrections in stock markets indicate structural negotiations on national economic condition.

But in fact, above is not true in all cases as countries like America and other developed countries liquidity levels are high containing maximum available liquidity as stock markets investment, but developing countries had only small proportion of their total capital as stock markets investment.

““STOCK MARKETS REFLECTS REAL ECONOMY ONLY FOR HIGH INVESTMENT DEVELOPED COUNTRIES””

High investment countries experiences wider alterations in their liquidity available not much influence are economic countries with purposeful and protective investment measure in stock markets.

Taking example of sub-prime crisis occurred in America, leads economic imbalance but not economic breakdown, even through it presents feat in stock market trader and investors suggesting large stock market crash.

All Major Economic Factors Are Nothing But Stock Market Influences. Continuous trends happening in stock markets were more indicative of countries economy rather than intra-day volatility.

Essential Factors Of Economy:
The Financial Growth Rate of Country, GDP, Recession Concerns, Government control, Reserve Bank Liquidity considerations, Investors Support all are the essential factors for economy.

Minor Economic Factors, But Major Stock market Persuaders:
But reversibly stock indices are intimated by Institutional Investors including national and foreign investors, Retail investors, Greed and Fear, Rumors, low influence but highly popularized issues, Fraud in small companies etc. Are minor economic factors, but they may become stock market rulers for sufficient longer periods.

Alternatively stock markets are much based on sentiment and technical analyzing, which are not having any importance in economy of country.

Comment on stock brokerage companies of India

2010-05-10T07:27:00.000-07:00

An Indian stockbroker or stock brokerage was an registered person or authority by Indian stock market controller SEBI (securities exchange board of india) that allows safe transactions in stock markets.

Present Trend: Subsequently, the trading of most retail investors is predominantly increased with stock brokerage organizations than previous trading methods using favorite individual stockbroker.
The Main Reasons for this condition in Indian stock brokerages may be of following reasons:

- A high security offered by the large stock brokerage organizations than that of individual stockbrokers.
- Many stock brokerage companies in india are with large market capital, some of them are listed in stock markets
- User compatible Trading Methods
- Decrease in Brokerage Charges by brokerage companies due to large competition in this field.
- Huge Margins giving by brokerage companies for their faithful traders and for large stock players as their clients.
- Timely mobile alerts and stock tips for free offering by some brokerages.
- Special subscription packages of various stock tips offering by the stock brokerages for their traders.
- Free or low premium Insurance facilities offering by some brokerages for their clients.
- Emerging Online trading facility and mobile banking, trading facilities. And their immediate esurience by stock brokerage companies rather than individual brokerages.
- Using of advanced software’s as their trading platform by the brokerages which are offering a high security along with easy trading platform.
- Finally the advertisement of stock brokerages on major business channels.

Below are the some stock brokerages mainly concerned with India with huge capital and large number of traders as their customers:
Reliance Money Brokerage:
It is a group company of Anil Ambani. It is offering latest mobile trading platform for its customers. It is offering lowest Intraday transaction brokerage charges and huge margins. But the required limit for trading is high compared to other brokerages. But also it following different criteria for trading in options ultimately forcing for large investment and risk.

Karvy Stock Brokerage:
Even through it is one of the oldest Brokerage with large number of clients, now it is working with a huge competition of other stock brokerages that are predominating it in their advanced technologies, only it can survive if it changes its brokerage strategy according users requirements and facility.

Indian Infoline Brokerage:
Infoline is Leading Stock Brokerage of India. It may be compared with Nse of india, likewise it is following the advanced software systems and advertisements and branches, showing that it will become the predominantly largest brokerage in india. But it is Not offering the special low brokerage plans or large margin strategies for its traders.

Religare stock brokerage, kotak securities, HDFC stock brokerage, Bonanza online are other stock brokerages leading in india.

With the severe competition existing among these trusted brokerage systems, investment traders are getting increase facilities and securities for their shares in stock markets.

They may be much decline in brokerage charges (excluding common stamp duties), better security during online transactions, increasing chain among the country, free subscription packages, phone banking interrelated trading, free daily stock tips, proper guidance, increasing time limit for margin trading, adapting advanced brokerage software’s, offering trading in other investment options related to stock markets like commodity investment and currency trading etc may be the reasons.

But stock market investors and traders should always be conscious about these stock brokerages, consider all the factors above to choose their choice brokerage including personal preference, security, value for money, proper placement, packages, other interrogatives. Having a good customer support center is essential for getting immediate response for your problems.

Growing Employment:
With a minimum certificate course many private stock brokerage companies are employing large number of candidates required for their expansion plans and growth opportunities in emerging Indian economy.

Investment In Brokerage Companies:
We suggest investment in Indian infoline. As a brokerage infoline is outperforming. It attracted a large number of customers from last few quarters even the recession suppresses the sector. Thoroughly analyzing performance, growth rate, expansion plans, financial capability, fraud less history, future of brokerage market confirms infoline as a First Option for a Portfolio Including Investment in Stock Brokerages.

Stockbroker, a Middleman b/w exchange and people

2010-05-10T07:25:00.000-07:00

A stock broker is a middleman between the exchanges and investors.
Broker provides the flexibility in deals of investors with exchanges.

Below are some entry questions over brokers:-

Is it not possible to deal in stock markets, without a broker?
It’s possible, but risky. Unless a broker you need a registration certificate from SEBI. Suitable bank deals are essential for cash deals with exchange. We need to trade under complicated stock exchanges trading platform, which cannot ascertain too many options as your brokerage. Or create a suitable platform with own servers, technologies.
Why to face all these risks? Its better to pay a small brokerage fee and enjoy easy trading.

Is my money safe on transactions with broker?
Mis-use of money by brokers, recorded cases is very few on this aspect. Check your brokers SEBI registration certificate it’s your ‘money safety certificate’.
Many brokerages are limiting transactions between trading account and bank account only. So there are no chances to mis-use your trading account.

Now brokerage charges, facilities offered are the ensuring factors effecting selection of brokers, as safety is not an issue. Many brokerages are now trusted corporate firms.

Indian securities exchange regulatory board, SEBI

2010-05-10T07:23:00.000-07:00

Securities exchange board of India.
To protect the rights and benefits of companies and investors, Indian government established SEBI. All the exchanges, brokerages work under regulations of sebi and every step by a stock exchange should be SEBI permissioned. Brokerages should be SEBI registered.

The primary function of regulatory authority is to regulate the capital markets.
Some of which includes:
-To control the stock markets from overflow of investments.
-To encourage the public participation in companies and to protect their rights.
-To prevent the malpractices in stock markets by any parties.
-Regulations that ultimately is to reach the capital expenditures and inflows towards the right edge.

Companies came to listing only after the IPO approval by SEBI. SEBI has to right to ban any investor, broker, companies insiders to participate in stock markets. Due to strict privileges by securities board, the complicated stock market deals are ensuing without any frauds.

Some SEBI regulations may be discouraging to foreign investments, but they are of very much essential to regulate markets.

Some examples of sebi regulations are:
The shares that are not in electronic form are not allowed to trade, so every share should be treated only if trader contains Demat account.

Stoppage of trading in a particular stock or whole markets, if they reached a certain maximum level (profits or losses).

Company promoters should inform to stock exchanges prior to any deals in their own company shares, sebi also planning to fix certain mandatory stake that promoter should have in their company.

Sebi may serious, if there is heavy short selling in some counters, especially by foreign institutional investors.

Sebi holds the right to suspend any investors, brokerages from trading in stock markets, if they participated in any mal-practices.

Optimistic future of commodity exchange MCX-India

2010-05-10T07:21:00.001-07:00

Multi commodity exchange of India.
As like NSE is specialized for its derivatives segment, commodities segment are best traded in MCX-India. A large number of commodities that are allowed by Indian government are traded for forward contracts in mcx exchange.

Mcx is the fine leading exchange of India. It has greater aspirations to grow, the likely reasons are:-
-In commodities trading mcx is outstanding exchange
-It is offering further improved, user-friendly technology of trading. Mcx launched its trading platform in local languages of India.
-Mcx already announced its curiosity to enter the stock trading.
-Bse, Nse had lesser chances to enter and to compete with mcx in full commodities.

Considering these if mcx entered stock trading with same technology and cost effective exchanging, definitely it turns into future leader.

Stock exchanges; BSE and NSE of India

2010-05-10T07:19:00.000-07:00

‘Bombay stock exchange’ and ‘National stock exchange’ are reputed stock exchanges in India.

BSE: Bombay stock exchange
It was established in mumbai.
It is the historical stock exchange of India.
It had wide horizons with credit of having listed large number of Indian companies.
Even though it is so far in listing large number of companies than other stock exchanges, Bse is pronouncing plenty competition from Nse.

NSE: National stock exchange, mumbai, India.
It is outstanding Bse with its new technology and user-friendly methodology.
Although listed companies are lower in number than BSE, total exchanged volumes are higher in Nse.
Nse is specialized in Derivatives segment (F&O)

Almost all major Indian companies are listed in both exchanges. The index of BSE is ‘Sensex’, while of NSE is ‘Nifty’. Most of us consider sensex as economic pointer of nation rather nifty. Because BSE has more listed companies it best represent the economic condition of country.

Now both the stock exchanges are valuing stocks under free float technique.
Stock exchanges work under the rules and regulation quoted by securities exchange board of India (SEBI)

Apart from the NSE, BSE there are few other exchanges of which mcx-India is reputed in commodities.

Brokers most prefer trading in NSE as it offers very new technology, which offers fastness, security, and user-friendly platform along with timely updates of various issues regarding trading, while Bse shows mild behavior towards these. But Bse is also planning to fortune its loosen fame, by launching its new model derivatives trading, website especially for delisting information of PSU”s etc.

what is Margin in trading, its uses, risks associated

2010-05-10T07:15:00.000-07:00

Margin is a credit taken from our brokerage house for investment in stock markets by paying a little interest on it. Generally brokerages allow us to buy more stocks than our actual money, the extra money they provided should be returned along with additional interest. Brokerages use your actual money as surety for their credit.

Here is a simple example,
Consider a stock ‘X’ trading at Rs.100/-, if you have RS.10000/- in hand, got 10 stocks. But you are in great hope that stock will gain good profits. Then, how to buy more than 10 stocks with same money. Here margin plays role. Margin amount should be returned along with interest, brokerage will have no involvement over your profits or losses made.

Taking original investment Rs.10000/- as surety, your brokerage will give another Rs.10000/- as margin (amount of margin varies for different brokerages). Pretty!! 20 stocks with only 10000. Brokerages generally give large margin for intraday traders, and should be returned on the same day along with the interest.

If stocks gain profits, you get more than original profits. Unfortunately if end in losses, you get intense losses than original. Interest rate is addition in either of cases.

How it happens is:

-Consider an investor who taken margin, against his Rs.10000/- to buy 20 stocks each of value Rs.1000/-
1.Suppose stock price rises from 1000 to 1200, Rs.200 is profit on each share.
2.Then on 20 stocks, 20*200 = 4000
3.Here Rs.4000/- is profit.
Investor needs to pay back margin amount along with little interest. (Interest rate varies for different brokerages)
If the investor not utilized any margin he will got only 10 stocks and so profit will be only Rs.2000/-

All this is only one side of coin, ‘as like you got more profits if stock gains, also got more losses if stock price falls.

Suppose, if stock reached to Rs.800/-.
Loss without taking margin = Rs.2000/-
Loss with margin = Rs.4000/-
So if you taken margin, now your net balance will be = 10000-4000 = Rs.6000/-

If the stock price goes on decreasing, your net balance will decline at rapid rate, then the brokerage thinks can the investor can able to pay back our margin amount?
If price of stock reaches a threshold decline level, brokerage sells off all your shares (as they fear of there credit amount), deduct their original margin and interest.
At last you remained with penny balance in your account and no holding shares.
Here, margin-less trader is winner, as he had no fear of selling off by brokerage, he stays with his stocks in account and enjoy the recovery of stock if happens.

So, even though margin is a very useful tool, only utilizing it very careful with follow of a risk less strategy will be beneficial. Don’t take so large available margin, as any mis-happen make you to remain with empty balance.

Explanation Upper, Bottom stock market Circuits

2010-05-10T07:11:00.000-07:00

To mean a sudden and huge change in either stock price/index, term circuit is used. While the term upper circuit denotes a good profit is gained, bottomed-out circuit denotes a loosed gallery.

Mainly the news makes the stock markets or specific companies to make and break through the circuits. Very good news makes the markets to hugely rally and vice versa.
Some examples, of the circuit formations are:
- When the sub prime crisis beaked in the January of 2008, the stock markets recorded a huge fall and recorded bottom circuits.
- After the announcement of Satyam scam, the company stock hugely falls and touches bottom circuits.
- After the win of U.P.A government with the consistent majority, the stock markets made a huge rally and touched upper circuits.

Sometimes rumors also make the markets or stocks to make circuits.

There are certain regulations over these heavy price fluctuations occurring in stock markets. Trading would be interrupted for some time by exchanges when primary circuits are touched. And trading will suspended for whole day if markets or stock prices again touched final circuits. These circuits will be fixed at certain levels huge percentage of raise or fall.

Stoppage of trading at upper circuit a mandatory is to prevent mis-use of stock markets. While interruption at lower circuits helps to protect the investors, investment from heavy losses.

These circuits had of very importance for day traders. They may generate profit rain, as well as huge losses.

Generally, on esurience of a good/bad news stocks with low float value had always risk of breaking circuits. Even small buying or selling by investors will reflect in large changes in stock prices for these stocks.

Recommendation: Book profits whenever your stock achieved a good amount of profit never wait for greedy returns, as touching upper circuit many times followed by fall. If your stock ended in bottom circuit, hold it for atleast two further days, If that stock is fundamentally strong tag it in your long-term portfolio or consider averaging.

Hedging Technique to protect our stock investments

2010-05-10T07:07:00.000-07:00

Hedge means protection. Hedging in investment terminology means ‘A technique followed to protect the investment against the risk’ involved in stock markets.
Stock market investments are in general risky, it turns even more risky when we invest in high risk shares, derivatives etc. Hence it would be better to follow a suitable hedging technique, based on our category of risk. In general hedging includes buying other types of shares or other securities (like derivatives, gold) to protect from probable risk in our actual investment.
Below are some examples of hedging:-

-Small cap companies have high growth opportunity and when succeeded they make investors huge profits. At the same time small caps may not have strong fundamentals and compromise of high risk. So, some blue chip stocks like reliance, infosys, tata group companies etc should be bought along with small caps.

-Pharma, health care, bank and PSU stocks are hedges for high-risk reality, IT, and related service sector stocks.

-‘Options’ of derivatives segment can be used to hedge against risk of stock market fall.

-Dividend yield stocks are best for constant returns, can be hedged against non-dividend yielding active stocks.

Even though hedging technique is used to insurance our main investments; it should be carefully done, such that ‘hedging should not neutralize your profits’.
For example, consider two pharma companies, one is of manufacturing synthetic cancer treating drugs and other company which manufactures natural cancer treating agents. Now buying shares of both companies is a good example of hedging. Suppose, if popularity of synthetic agents is increasing, synthetic drug company profits and ultimately its stock prices will fall. But now we are hedged with other natural drugs company, its profits raises and risk from first company will be covered. But here some factors are considerable:
-The net profit earned by you is almost neutral.
-Only rise in capital of sector i.e. cancer treating drugs here, only will give you good profits.
So always use ‘hedging technique for shares with the future scope of the sector rather than companies, especially if both are operating in same compotator business.

In my opinion, the best hedging tools are Derivatives (F&O) and active stocks.
Because if your main investment is one lakh, your hedging investment should be pretty less than 1 lakh, but can protect all your 1lakh. How to achieve this? Simple buying some very active stocks, options, or futures. For example, you invested 1 lakh total as long-term portfolio; buy some options or futures that profitable if stock markets fall (worth atleast 10,000). If really markets hugely fall your 1 lakh will become 50,000. than your options or futures hugely gains and may become 50,000, based on intensity of fall. so, here you successfully protected entire 1 lakh with only 10,000.

Hedging Technique to protect our stock investments

2010-05-10T07:04:00.000-07:00

Hedge means protection। Hedging in investment terminology means ‘A technique followed to protect the investment against the risk’ involved in stock markets।

Stock market investments are in general risky, it turns even more risky when we invest in high risk shares, derivatives etc। Hence it would be better to follow a suitable hedging technique, based on our category of risk। In general hedging includes buying other types of shares or other securities (like derivatives, gold) to protect from probable risk in our actual investment.

Below are some examples of हेद्गिंग:
Small cap companies have high growth opportunity and when succeeded they make investors huge profits. At the same time small caps may not have strong fundamentals and compromise of high risk. So, some blue chip stocks like reliance, infosys, tata group companies etc should be bought along with small caps.

-Pharma, health care, bank and PSU stocks are hedges for high-risk reality, IT, and related service sector stocks.

-‘Options’ of derivatives segment can be used to hedge against risk of stock market fall.

-Dividend yield stocks are best for constant returns, can be hedged against non-dividend yielding active stocks.

Even though hedging technique is used to insurance our main investments; it should be carefully done, such that ‘hedging should not neutralize your profits’.
For example, consider two pharma companies, one is of manufacturing synthetic cancer treating drugs and other company which manufactures natural cancer treating agents. Now buying shares of both companies is a good example of hedging. Suppose, if popularity of synthetic agents is increasing, synthetic drug company profits and ultimately its stock prices will fall. But now we are hedged with other natural drugs company, its profits raises and risk from first company will be covered. But here some factors are considerable:
-The net profit earned by you is almost neutral.
-Only rise in capital of sector i.e. cancer treating drugs here, only will give you good profits.
So always use ‘hedging technique for shares with the future scope of the sector rather than companies, especially if both are operating in same compotator business.

In my opinion, the best hedging tools are Derivatives (F&O) and active stocks.
Because if your main investment is one lakh, your hedging investment should be pretty less than 1 lakh, but can protect all your 1lakh. How to achieve this? Simple buying some very active stocks, options, or futures. For example, you invested 1 lakh total as long-term portfolio; buy some options or futures that profitable if stock markets fall (worth atleast 10,000). If really markets hugely fall your 1 lakh will become 50,000. than your options or futures hugely gains and may become 50,000, based on intensity of fall. so, here you successfully protected entire 1 lakh with only 10,000.

Meaning & Best followable Stock market strategies

2010-05-10T07:01:00.000-07:00

A technique or a standard method to be followable in stock markets with aim of getting profits on investments and to minimize the losses as possible.
A strategy is a ‘Complicated mix of technical analysis, present market mood, logical expectations’ that we should select based on ‘Our risk tolerance capacity’ and ‘Time period of investment’

Intraday investor strategies:
An intraday investor would have high-risk capability but he aims at large profits within short periods, so he opts for intraday strategies that include ‘Buying and selling of shares with targets and stop losses’. His strategy includes active and risky stocks, no bother on companies’ fundamentals.

But the aim of a long-term investor is entirely different,
Long-term investor strategies:
Long term investor strategy includes ‘Companies that have strong fundamentals along with good future scope, no bother on intraday activity’. Also shares from different sectors (like Auto, Pharma, IT etc..) with in-depth analysis on every company fundamentals.

There are numerous types of strategies like rumor based, budget based, foreign markets, derivatives, technicals based, sector and stock specific news etc for intraday or short term investors and based on future opportunities of sector, expected companies performance, immix of different sector stocks strategies for long term investors. We discuss about every strategies on later pages of the blog.

Rumor based: where the traders logically deal with stocks that effected by rumors. For example, short-selling rumor stock for intraday would give large profits, and buying the same stock at deep bottom for long term is a right decision.
Foreign markets based: due to globalization all economies of many countries are connected, so of stock markets. Hence the movement of foreign stock markets, especially U.S and European markets will definitely influence Indian stock markets. Some traders will purely trade based on global news and their market movements.
Budgets based: during the day and some days before the announcements of countries or railway budgets, active stock market traders have a real opportunity. Following a strategy based on Rumors, clues, and expectations of budget is many times profitable for short-term investors. On the budget announcement day, working on stock investments according to live news was really helpful of intraday traders.
Government decisions: government decisions like bailout packages; disinvestments from PSU companies will affect stock markets. Strategy can be followed for these. For example, announcement of disinvestments from a particular PSU company, leads to rise in its stock price, but after completion of disinvestments process? Definitely fall.
RBI decisions: strategy spread based on RBI interest or Repo rates is very much profitable for intraday. Say, market expected interest rate deduction (positive news) from RBI during its board meeting day. But RBI had taken a neutral decision towards it, even though stock markets fall because it initially raised expecting good news. Expecting the same case before announcement was a great opportunity of profit for intraday traders.
Important numbers: that relates to stock markets like GDP numbers, industrial growth rates, inflation rates, American job data, economic surveys by media all effect the stock markets and suitable strategy followed basing on expected condition is profitable.
Technical analysis strategies: stock markets will have resistance at 18000 points and have support at 17000 points, like these analysis’s based on past stock market movements will also some times work. But strategies based on technical analysis’s are most popular and most following.
Day of announcement of quarterly results of company: based on expectations of probable quarterly results that company may announce and following a strategy basing on it, will profitable if real case anticipate us.

Like these there are numerous situations in stock markets, which will surely profit you if followed adequate strategies.

Terms meaning: Trading, Traders of stock markets

2010-05-10T06:57:00.000-07:00

Even though investment and trading have same textbook meaning, ‘Trading’ term is used for active investments and persons who trade in stock markets are called Traders.
In relation to stock markets ‘trading’ term is getting more response, replacing investment. In simple, trading means active buy and sell deals in securities like shares, derivatives, commodities, currencies, mutual funds etc..

For assurance, all intraday deals are called as trading.
In foreign stock markets word ‘Trading’ is more popular than that of Investment
To discuss about live or intraday stock markets, we use the term trading.
For example, we use ‘market trading hours’ to say working hours of markets, because here the case is about intraday markets.
Another example we quote that a stock is trading at Rs.x/- or Sensex is trading at X points, as they mean live stock markets. Other examples are trading volumes, traded stocks all are related to day markets.
The stock exchanges are themselves naming some securities like ‘Currency trading’ ‘Mutual fund trading’.

Different types of trading:
Cash trading: The trading in normal shares is termed as cash trading. It includes both intraday and delivery deals.
Derivatives trading: The trading in derivatives or F&O section. It includes two types.
Futures trading: the buying, selling, shorting of futures of stocks or index refers to futures trading.
Options trading: the selling and buying of ‘calls and puts’.
Commodity trading: The trading in different commodities like metals, Agri-commodities.
Gold trading: The buying and selling of gold units through Stock markets or Gold ETF’s.
Currency trading: The betting of various currencies over other currency rates. For example, rupee against dollar.

Trading options available and their main purposes:
Trading in shares: common form of investment helps to grow our money along with the growth of Indian companies. Generally return good profits in long-term investments. Risk level is optimum and mainly depends on company fundamentals and its sector.

Derivatives trading: they are more risky and return great profits, also useful for hedging to protect our other investments. For example, by buying appropriate futures or options, losses from our shares can be minimized.

Trading in commodities: useful for the Business-persons in that commodity field. For example, trading in steel will very beneficial for steel Business-man to protect themselves from sudden variations in steel prices.

Trading in Gold units: on the recent times, gold is competing with shares in returns. Gold trading is also an best opportunity to tolerate the rising inflation troubles.

Trading in currencies: helpful for exporters and importers to protect their profits, due to losses occurring from sudden fluctuations in currency exchange rates.

Meaning, Investors and Investment stock market terms

2010-05-10T06:54:00.000-07:00

The cash inflow aided to start a business model or to further extend it, is called as investment. The persons who made investment are called investors. In view of stock markets the term ‘investment’ mostly refers to long-term positions.

Unlike credit or loans, investment was an evolved technique that involves ‘Sharing’. We pay back credit at bounded interest rate irrespective of profits or losses in business, credit suppliers not involves in our business decisions. But in an investment process everything is shared between investors, which may be business decisions, profits or losses.

The stock markets are one type of investment enhancers, that oppurtunize investment of even small money from public into large companies. The buying of shares (equities) is one of well-known prospect offering by stock markets. Apart from the equities, wide range of investment opportunities is offering by stock exchanges like derivatives, mutual funds, commodities and currency trading etc.

Investment is a best process to make more money than simply savings, but investment involves risk. Hence enough care should be taken while investing. Stock markets are one of the investment opportunities available, but they are more popular and preferable than other traditional investments.

Here is a comparison between traditional Property investment and Stock market investment:-
Property Investment: we may not have complete knowledge on place we want to buy an estate. Information about that site may not available or little available on media and web. Large amount of money is required at a time. Buying and selling of property is very complex.
Stock market investment: large number of magazines, websites are available to discuss on best shares to invest. You can start stock market career with small money. Buying and selling of shares is very easy and instant task.

Delivery buying of Shares in stock market Trading

2010-05-10T06:51:00.000-07:00

If the deals are not settled on the same day they are called as delivery deals.
If you are buying shares and selling on the same day it is ‘Intraday trading’, if are not sold on the same day they are called ‘Delivered shares’

No mean, whether your bought shares are sold on the next day or after far long days, they come under delivery trading. Margin available is less for delivery trading compared to intraday trading, but brokerage fee is more for delivered shares (many brokerages are charging 4paise/100rs investment for intraday deals and 40paise/100rs investment for delivery deals). The delivered shares are settled basing on the T+2 settlement process.

What’s benefit for delivery traders over the intraday traders is ‘opportunity to bag opening profits, if any’ (losses also!). For example the closing price of a stock X by today’s closing is Rs.100/-. Say, very good news to stock markets came on today after the closing of markets. All we know markets gains with good news. On next day, the stock is no more available at its same price, From opening itself price may go for 110 or 120, So intraday investors are missed the gains from that stock.

easy stock basics site map

2010-04-24T00:18:00.000-07:00

What is Intraday trading or day closure deals?

2010-04-18T23:03:00.000-07:00

Intraday trading: It is one type of investing practice in stock markets involving both the deals, buying and selling on the same day.
You now! Many investors are now living by stock trading? They are depending on possible profits earning on intraday market sessions.

In intraday trading ‘Bought shares, should be returned (by selling) on the same day before market closing. Likewise shorted shares (selling shares actually without having them) should be bought on same day. General the brokerage fee for intraday transactions is much less than delivery deals.

Generally Intraday investors pick actively trading stocks, which in sense swing frequently; so that credibility of profits will be more. Even falling stocks are also profitable in intraday trading as we can ‘short sell shares at high price and return by buying at low price’.

Characteristic feature in intraday trading is risk. Blue chip or index stocks definitely will return good profits in long term, but they also swing widely on intraday sessions. So even a exclusive blue chip or index stock investor, may also get huge losses on intraday trading.

Intraday trading was generally done basing on ‘technical points of targets and stop losses’ following either general market trend or swing market. Some investor’s even trade basing on rumors.

Now a days intraday investors are conjuring more to enter derivatives, as profit opportunity is unlimited within a single session. Derivatives are also useful in day tradings to protect our investments.

In fact, intraday investments are no way useful for companies, the middleman’s’ benefiting by intraday volumes are brokerages and stock exchanges.

What are Actively trading circuit breaker stocks?

2010-04-18T23:00:00.000-07:00

Actively trading stocks, Even though not an official terminology, its common word for day traders.

Stocks whose prices change frequently, probably in daily circuits are synonymously pronounced as actively trading stocks. Investors of active stocks get better profits, than normal investors as Rs.100/- stock may suddenly jump to 120 or more. Why some stocks only turns active? Certain reasons may be low floating value of stock or investor fancy, temporary sector or company specific reasons. But problem associated with them is risk. Superfluous care with suitable hedging should be done while investing in active performers, as in general stocks that ‘gain more, lose more’.

The stocks day performance will not affect long-term returns. Hence based on company fundamentals active stocks are also suitable for long investments. But avoid active stocks for long investments unless it is of fundamentally very strong company. We negative sign active stocks for short-term traders.

Our recommendation is to ‘choose a active stock that is seated on BSE 30 or NSE 50 indexes, so that we have only minimal risk, but trustful returns. Basing on above advice our top recommendation is ‘JP associates’ followed by ‘DLF’. In general real-estate stocks are active in nature, but many of them comprise high risk. So picking a real estate stock that is fundamentally strong is an ideal choice. ‘Indian bulls real estate’ is our favorite active stock in daily circuits.

Tell me what is Mutual fund NAV?

2010-04-18T22:57:00.000-07:00

NAV means Net Asset Value; it represents the current value of our mutual fund units at which they are trading. It is similar to CMP of shares in stock markets
NAV is measure only useful for open traded mutual funds, as buying can be done at desired NAV value.

Like shares NAV changes based on the market conditions and securities that mutual fund company is invested. It continuously alters on the intraday during trading hours during market working days.

The NAV during initial fund issue is the base value of that fund. The base value NAV is allotted on company preference.

But unlike in shares the NAV value is not affected by public fund holders (Demand to fund), say that even large investor response had come to fund its value (NAV) cannot increase.

ok

2010-01-13T00:10:00.000-08:00