Indian Stock Markets Plunge Pressures Singh as Economy Teeters

India’s largest share market slide in nearly 2 years, surging binds yields and unprecedented plunge in the rupee are pressuring officials for fresh steps to stem capital outflows and revive a struggling economy. Standard & Poor’s 500 BSE Sensex Index sank 0.8% in Mumbai, extending 4% loss on 16^th August, whereas rupee touched an all-time low of 62.46 per dollar. The market rout underscores the failure of months of measures to contain outflows from higher interest rates to gold import curbs. Foreigners marketed a net $3 billion of Indian bonds and shares last month as the slowest growth in a decade made Asia’s 3^rd biggest economy vulnerable to a pullout of funds from emerging markets, spurred by speculation the Fed will cool stimulus.

Ms. Priyanka Kishore, Strategist at Standard Chartered PLC, London said the market is questioning the effectiveness of policy makers’ moves and options offered to them. Earlier, the govt. said it had a grand plan. This is what the market expected, however the final measures disappointed. The currency has weakened around 26% versus the dollar in the last two years.

Policy Concern

Manmohan Singh, Prime Minister said India won’t face a repeat of that condition as it has enough reserves for around 7 months of imports, compared with two weeks back then. Robert Wandesforde, Economist at Credit Suisse Group AG, Singapore said our main concern is that policy authorities still don’t get it – thinking this is fairly a minor squall that will simmer down relatively quickly with fairly minor actions. The current account gap widened to 4.8% of gross domestic product in 12 months ended March. RBI (Reserve Bank of India) estimates the sustainable level is 2.5% of GDP. Prasanna Ananthasubramanian, Economist at ICICI Securities Primary Dealership Limited, Mumbai said high CAD (current account deficit), high fiscal deficit, high inflation and slow growth all point to the inescapable conclusion that India’s problems are structural and deep.

Staunch Outflows

While other developing countries are also striving to staunch outflows, the 12% fall of rupee in the last 3 months is the worst after 15% decline in Brazil’s real in the basket of 24 emerging markets tracked by Bloomberg. Since mid-July, RBI (Reserve Bank of India) has raised bank rates and marginal standing facility, tightened lenders’ daily reserve needs and capped cash injections into the banking system to curb the supply of rupees, seeking to shore up currency’s value. Government also raised taxes on gold imports to try and narrow trade imbalance. It plans to enable some state firms to issue quasi-sovereign bonds for garnering inflows to help finance current account gap.

The monetary authority targeted outflows on 14^th August, cutting the amount Indian firms can invest overseas without approval to 100% of their net worth from 400%.

Funding Risk

Palaniappan Chidambaram, Finance Minister said curbs on silver and gold imports and plans for compressing inward shipments of non-essential items will trim the current account gap to $70 billion or 3.7% of GDP this fiscal year. Chetan Ahya, Economist at Morgan Stanley in Hong Kong said India will remain exposed to funding risks, if consumer price inflation stays above 7% and current account deficit exceeds 2.5% of GDP. International funds have cut holdings of rupee debt by around $10 billion since 22^nd May, when Ben Bernanke, Chairman at United States Federal Reserve said $85 billion a month of debt purchases could be reduced if American jobs market continues to enhance.

The economy of India might expand 5.5% in the year through 2014, compared with 5% in the last 12-month period. That lags behind the 10-year average of around 8% in addition to the performance of neighbors from Indonesia to Philippines.

Repair Image

Singh said in a speech on 15^th August marking Independence Day of India that slow growth won’t last long. Work on rail projects, industrial corridors, airports and ports will begin in coming months. The premier is seeking to repair the image of his government and ruling Congress Party before elections due by May. Graft scandals, clashes with coalition partners and the risk of credit-rating downgrade have hurt his administration. Etihad Airways PJSC agreed in April to purchase 24% share in Mumbai-based Jet Airways India Limited for $334 million (Rs. 20.6 billion), taking benefit of the changes. AirAsia BHD won approval to form a venture with Mumbai-based Tata Group to set up local low-fare airline.

Rupa Rege Nitsure, Economist at BOB (Bank of Baroda), Mumbai said the figures underscore India’s need to address structural issues like governance, policy uncertainty and infrastructure bottlenecks.

All About Share Market

The stock market by definition is a place where shares of different firms or collective shares are traded. It is an open market for fiscal operations like trading of company’s derivatives and shares at fixed cost. These securities are further listed on stock exchange. The share market doesn’t provide any corporeal service and isn’t separately owned business entity. It was in the year 1875 that Indian stock market first started functioning. The first share trading association in India was called Native Share and Stock Broker’s Association, only to become BSE (Bombay Stock Exchange) later on. This trading association started its operations with about 318 members.

Variations of Indian Stock Market

Markets for Derivatives

Commodities Market

Bond Market

Derivatives don’t have any specific market of their own. Nonetheless, like bonds, the majority of their markets are over the counter types. Bond markets are a traditional form of stock markets. They are mainly informal over the counter markets where bonds are marketed. Commodities are marketed in commodity market.

Main Components of Indian Stock Market

NSE (National Stock Exchange)

NSE (National Stock Exchange) is considered to be one of the leaders in stock exchanges, in terms of total volume traded. The market capitalization, NSE touched around $921.31 billion at the end of 2009 and received the recognition of stock exchange in 1993 under Securities Contracts Regulation ACT, 1956. The products, which are traded in NSE include:

Retail Debt Market

Wholesale Debt Market

Options (Call & Put)

Futures (Both Stock and Index)

Share or Equity

National Stock Exchange has a completely automated screen based trading system that’s called NEAT system. The transactions are carried on with efficiency, speed and are all transparent. NSE’s risk management system is best-in class and can be regarded as the benchmark for other bourses. NSE’s leading index is called Nifty or Nifty 50 and consists of 50 diversified benchmark Indian company scrips. It is constructed on the basis of weighted average market capitalization method.

BSE (Bombay Stock Exchange)

BSE (Bombay Stock Exchange) is one of the oldest stock exchanges in the entire Asian region. If someone wants to know the history of Indian stock market, it becomes synonymous with the history of BSE. It began functioning in the year 1875 with the name Native Share and Stock Broker’s Association. Under Securities Contracts Regulation Act, 1956, the association got its recognition as stock exchange in 1956. The products traded in Bombay Stock Exchange include:

Debt Instruments

Derivatives (Options & Futures)

Shares or Equity

The main index of BSE is called Sensex or BSE Sensex and is an index that consists of 30 financially sound company scrips with option to modified and reviewed from time to time. Leading bourses such as Dow Jones also follow this methodology.

Regulatory Authority of Indian Stock Market

SEBI (Securities and Exchange Board of India) is the market watchdog and has the responsibility of protecting investors’ interests, helps in the development of securities market in the country and develops regulatory norms.

Why to invest in Indian Stock Market?

A trader doesn’t need bags of money to begin investing in the share market unlike purchasing property and paying off a monthly mortgage.

Time of trading involved spans from small to big. One can trade for a short period of time or even a lengthy span.

It helps you to see ‘fast’ cash if the market is in robust mood and helps in fast liquidation.

Essential rules of Indian Share Market

Whenever stock market is at its crest it is bound to dip at some point of time.

Unlike common belief of investing in booming stock market, it is advisable not to block your hard-earned money in already flourishing NIFTY and Sensex. It is better to wait for market bottom trend and then buy stocks at lower cost in order to trade it later.

If share market is down, it will only increase if there are no external aspects influencing it.

Seek the advice of professionals who will not only offer tips on best investment options, but also on favorable market situations.

Excellent time for investment is when the market is low, keeping the basics in consideration.

Whenever market witness an upward trend always buy first and then sell securities, and when the market dips always purchase later and sell first.

Update yourself on prevailing market situations.

Tips on investing cleverly in Indian Stock Market

Consider selling shares which you have purchased long time back and are indicating gains. Even if they are not willing to provide you considerable gains then it’s time to get rid of them.

Diversify your shares and try investing in different sectors. Also consider investing in equity funds and for stabilizing your equity investments. Invest a part in fixed income options like Public Provident Fund, bonds, post office deposits and National Savings Certificates. You can also consider a balanced or debt fund if you have restrained budget.

If you have allocated more than half of your investments in equity, then stick to your plan. Don’t surpass that pre-decided perimeter and believe in the performance of market.

Don’t consider the shares based on layman’s advice. Stride carefully and invest in shares which you are comfortable investing in. Judge the company by its past records and assess it personally.

Nonetheless, if Indian stock market grows or remains steady, this reveals the company is holding its own better than others and is likely to be well-positioned to take the advantage of business opportunities when economic situations enhance.

 

Bull And Bear In Stock Market

No one really knows the exact origin of terms “bear” and “bull” to describe the share market; however their meaning is clear. The most important thing to know about these terms is that they describe long term trends and not short term changes. Bear and bull markets are generally measured in years. First of all, let’s remember that bulls are burly and spirited and bears are sluggish. The terms are used for describing sentiment or general attitudes and actions, either of the market or an individual. Bull and bear are terms often heard and used in while investing or trading in the Indian share market. For starters, these terms might be difficult to understand. In stock investing and trading, there are bulls and bears. It sounds dangerous, but it isn’t. you often hear of the market being bearish or bullish. So what is the definition of bear market and bull market?

Bull Market: A rising market where purchasers far outnumber the sellers.

Bull: An operator who expects the share price to increase and takes position in the market to sell at later date.

A bull market is an indication that traders and investors expect share prices to increase and have optimistic view of market trend. It is a market when the market appears to be in long-term climb. These markets tend to develop when the economy is strong, inflation is under control and unemployment is low. The psychological and emotional state of traders also affects the market. For instance, if traders have faith that upward trend in stock prices will continue, they are likely to purchase more stocks.

If there are more buyers interested in purchasing shares at given price unlike there are sellers who are willing to part with their shares at that price, stock price will continue to increase. This is when the market is showing confidence. Indicators of confidence are prices going up. Number of shares traded is also high and even the number of organizations entering the share market show that market is confident.

Bear Market: A falling and weak market where purchasers are absent.

Bear: An operator who expects the share price to fall.

A trader/investor who expects share prices to fall is known as bearish trader. A bear market describes the market, which appears to be in long-term decline. These markets tend to develop when inflation is rising, unemployment is high and economy enters a recession. Traders lose faith in the market, which in turn decreases the demand for stocks. Remember that a sustained bear market is something, which you should expect to occur from time to time.

A bear market is opposite to bull. If markets fall by more than 20 percent then we have entered bear market. It is a market that shows lack of confidence. Prices hover at the same price then go down, volumes are stagnant and indices fall too. In bear market, people are waiting for bulls to begin driving the prices up again.

How To Predict Bull and Bear Markets?

One of the convenient ways to predict both kinds of markets is to realize that what goes up must come down. Identically, if the market is currently falling, you can be certain that eventually it will pick up again. There are no precise ways to predict either bear or bull markets, albeit general social economic conditions can help you to determine what will happen. A country that wages a war will experience bullish market situations as government contracts create more jobs and boost investor confidence if their expectation is to win. Sudden international crises create bearish situations and push market downward. If you notice from Indian share market research that several indexes have changed by 15 to 20 percent, you can be sure that market direction is changing.

Investing During Bull and Bear Markets

Novice traders often assume that they need to invest heavily during bull markets and avoid investing during bear markets. Experienced traders know that you need to be able to invest in any kind of market situation, provided that you do so wisely. Every trader has different strategy to deal with bearish or bullish markets. Most traders take the benefit of bull markets by purchasing shares as soon as market turns bullish. Generally, traders can take more chances with market during bullish phase.

In bearish market situations, prices are falling and the possibility of loss is good. It isn’t always possible to tell when bearish situations will end. Thus, if you invest during such market situations, you might have to suffer some losses before bullish times return and you are able to realize a profit. Defensive shares are another good choice, which remain stable during bearish situations. Alternatively, some traders see bearish market situations as an ideal time to trade in more stocks. As many people are selling off their stocks such as valuable blue-chip shares at low prices, it is possible to setup long term investments, which will prove valuable during bullish times.

While every trader loves to see upswing in prices during bull market, the wise investor will be able to handle the bear market as well. Whether you are an experienced investor or are just starting to invest, learning to deal with various market conditions, you need not panic and decide patiently on investment.

Rules Of Investing In Stock Market

The lure of big money has always thrown traders into the lap of share markets. Nonetheless, making money in stocks isn’t easy. It not only needs oodles of discipline and patience, but also great deal of sound understanding and research of the market amongst others. Added to this is the fact that Indian share market volatility in the last couple of years has left traders in the state of confusion. They are in a dilemma whether to sell, invest or hold in such situation.

Investments’ is a sacred term for individuals. For many, investing means a type of compulsory savings from one’s earnings and getting lump sum money later. Nonetheless, there’s a lot more to investing just that. Investing falls within a wider gamut of financial planning and needs considerable groundwork and thought. Here, we have outlined some important guidelines to be borne in mind while planning your finances.

1) Bulls, Bears Make Money, Pigs Get Slaughtered

It is necessary for all investors to know when to take some off the table.

2) It is OK to Pay Taxes

Stop fearing the tax and start fearing the loss as gains can be fleeting.

3) Don’t Buy All at Once

For maximizing your profits, work your orders, stage your buys and try to get the best price over time. More

4) Purchase Damaged Stocks and Not Damaged Firms

There are no refunds, so do your research and focus your trades on damaged stocks instead of organizations.

5) Diversify to Control Risk

If you control the downside and diversify your holdings, the upside will take care of itself.

6) Do Your Stock Homework

Before you purchase any stock, it is necessary to research all aspects of an organization.

7) No One Made a Dime by Panicking

There will always be a better time to leave the table, so it is best to avoid fleeing masses.

8) Purchase Best-of-Breed Companies

Investing in a more expensive share is invariably worth it because you get piece of mind.

9) Defend Some Stocks, Not All

When trading gets tough, pick your favorite stocks and defend only those.

10) Bad Buys Won’t Become Takeovers

Bad firms never get bids, so it’s the good fundamentals you need to focus on.

11) Don’t Own Too Many Names

It can be constraining, but it is better to have few positions you know well and like.

12) Cash Is for Winners

If you don’t like the market or have anything compelling to purchase, it is never wrong to go with cash.

13) No Shoulda, Woulda and Couldas

This damaging emotion is destructive to the positive mindset required for making investment decisions.

14) Expect, Don’t Fear Corrections

It’s not always clear when correction will strike, so expect and be prepared for one at all times.

15) Don’t Forget Bonds

It is important to watch more than stocks, and bonds are stocks’ direct competition.

16) Never Subsidize Losers With Winners

Any trader stuck in this position would do well to sell sinking stocks and wait a day.

17) Check Hope at the Door

Hope is pure, simple and emotion and trading is not a game of emotion.

18) Be Flexible

Recognize and be open to unexpected shifts in the market because business, by nature is dynamic and not static.

19) When Chiefs Retreat, So Should You

High-level executives don’t quit a company for personal reasons, so that is a sign something is wrong. More

20) Giving Up on Value Is a Sin

If you don’t have patience, think about letting someone who does run your money. More

21) Be a TV Critic

Accept that what you hear on television is probably right, but no more than that. More

22) Wait For a Month After Preannouncements

Pre-announcements signal ongoing weakness, wait for a month to see if anything has gotten better before you pull the trigger to purchase.

23) Beware of Wall Street Hype

Never miscalculate the promotion machine as analysts get behind stocks and can keep them propelled in an up direction well beyond reason.

24) Explain Your Picks

Purchasing shares is a solitary event, too solitary in fact, so always ensure you can articulate your reasoning to someone else.

25) There is Always a Bull Market

It is OK if you have to work hard to find it, just don’t default to what’s in bear mode because you are intellectually lazy or time constrained.

Although no sure-shot formula has been discovered yet for success in the Indian stock markets; these golden rules which, if followed prudently might increase your chances of getting a good return.

Stock Trading Vs. Stock Market Investing

Probably one of the most basic yet misunderstood truths about the Indian share market is the difference between stock investors and stock market traders. Both strategies are completely different based on different tactics, personalities and analytics. Nonetheless, many would be investors’ use the terms interchangeably and as such are perhaps confused then why taking advice from one then the other always proves unsuccessful. Stock trader is basically a short term trader who isn’t concerned with long term movements with organizations or even of company’s health. Stock trader is mainly concerned with making profit over a period of seconds to couple of weeks. His strategy is to replace the market maker as seller to retail investor.

The stock trader’s main competition is market maker, which is an investor or institutional investor, who purchase securities packages directly from organizations and sells them to retail investors. The market makers’ liquidity is what keeps the market liquid at any given time and market makers are entities, which stabilize the moment to moment stock price. Market makers are highly experienced traders with the latest in automated computerized technology. The successful stock trader attempts to cut the market maker off from some of his stocks and sell them at a profit to retail investor first. This can be done in seconds or weeks by the method called swing trading. Successful stock market traders are able to decipher reports and read charts instantly and basically have access to the latest of each.

On the other hand, stock market investor doesn’t concern himself with stock traders’ dealings and is interested in finding good firms to invest in over a period of months to years. He doesn’t worry about market makers’ and stock traders’ short term movements attempting to profit in short term. To be a successful stock market investor needs proper analytics and more research than speed and technology. Be prepared to vet with firms you like by reading their 10-Q and 10-K reports, keeping up with investor relations associates of the company and listening to investor calls. A successful share market investor usually selects an industry in which he/she has some experience so as to be able to better decipher the data he gets.

To be a stock market trader needs latest technology and speed. To be a successful long or short term investor usually needs picking one strategy over the other and sticking to it. To be a stock investor needs dedication and research to analyzing data. The middle ground is no man’s land, and the sooner you pick one side or the other based on your resources and personality, the better off you will be.

Sensex jumps; Realty, Capital Goods stocks in action

HSBC India Manufacturing PMI said in June, Indian factory activity remained weak as new orders decreased for the first time in 4 years. Nifty is trading 40 points up at 5883, while Sensex is 149 points up at 19,545. ITC, Bajaj Auto, ICICI Bank, Infosys and TCS are seeing some weaknesses, whereas HDFC, L&T, Tata Motors, Reliance Industries, Dr. Reddy’s Laboratories, Jindal Steel, BHEL and Bharti Airtel are leading. Amongst segments, IT disappoints, whereas realty, FMCG, oil and gas, metal, healthcare, power, capital goods, consumer durables and banking gain. Files purchased worth Rs. 11.24 billion on Friday.

In June, HSBC Purchasing Managers’ Index recorded above no-change threshold for 51^st consecutive month. At 50.3, up slightly from 50.1, the latest index reading was consistent with marginal expansion of the manufacturing sector of India. Total new orders fell for the first time since 2009. Panel members said that economic situations in the country were fragile, resulting in lower demand. Mr. Hemant Nahata of IIFL expects Nifty to top at 5830-5865 levels and advises caution to those seeking long positions. Indian rupee, stocks and bonds rallied as govt. agreed to increase natural gas prices. Cement and auto stocks remain on the radar, as organizations from both segments will begin revealing monthly sales volume data for June 2013.

Asian markets are lackluster. June services and manufacturing PMI data, ECB meet on unemployment data and interest rates from Europe and America will be tracked closely this week. Standard & Poor’s 500 slid 0.43% and Dow fell 0.76%. NASDAQ closed marginally higher. China’s manufacturing expanded at slowest pace in 4 months in June. GMR (Grandhi Mallikarjuna Rao) Infrastructure stock is trading up 4.26 percent at Rs. 18.35. The company is amongst 11 bidders initially shortlisted to build a 200MW gas-fired power plant in Malta in Africa. TCS stock is trading 1.77 percent down at Rs. 1491.55, after the company said it is planning to sack 172 employees at its Finland offices by August.

 

How To Trade In Stock Market

Those are new to the share market, it is quite essential to know what basically the stock market is. Share market is a place for trading of company derivatives and stocks at an agreed price. Share market investment is basically a calculated decision so that one can get profit out of it. To get benefit out of these markets, it is essential to have some knowledge about functioning of stock exchanges. There can be participants who might range from small individual to large hedge fund traders. A market is one of variety of different institutions, systems, procedures and social relations whereby individuals trade by exchanging services and goods. There are quite a lot of advisory and stock broking companies, which provide stock recommendations, quality calls & tips for share market in India, Indian stock market tips, intraday stock tips India, share market tips in India, India share market tips, commodity trading tips, tips on how to trade in stock market, how to trade in nifty, value of commodity tips in India, value added commodity, value of commodity expressed in terms of money, Trading Tips, Tips Stock Market, option tips, Intraday Tips, stock tips, market tips, tips India, Stock Market Tips and options tips

Indian share market is a place, which enables sellers and buyers to exchange things. It might vary in range, size, geographical range in addition to kinds of services and goods traded. There are two kinds of markets; these include prediction markets and financial markets. It is necessary for a novice investor to know each and every aspect of options, Futures, stock options, stock trading, investments, mutual funds, company, IPO, shares and dividends. Most profitable investors keep their losses below 40% over a month or week.

On every trade, they try and make 2% profit that’s usually intraday trading. It is much smarter to think in percentages than rupees. When you have made a forex or stock trade and it’s going the wrong way, you need to cut your loss and exit the trade. Chasing losing trades is a big mistake. You should stop loss the stop loss. If you read charts wrong or some other indicator, it’s best to exit the trade and save your trading capital. Most of the times in fast moving markets, this will happen particularly if news has broke that influenced the market direction. Forex and stock trading is risky so the losses you take should be small, if you stick with solid trading plan and know where to set stop losses.

Changing your trading plan from hitting the sell and buy button and moving in and out of positions will lose your money in the long run. How to understand and use highly profitable Japanese candlestick patterns and charts? You will be able to get in trades earlier and exit with more profit. You will also demand and supply concepts which move the markets. So, take the benefit of novice investors who make the same mistakes over and over again.

You will get in understanding and depth training of core technical analysis concepts and will know when to purchase and sell before you enter a trade. Just using resistance and support is the basis for hundreds of successful trading systems. Discover how to advantageously place your stop loss and save yourself from huge losses right out the gate. With your proper risk and stop loss management in place you will have the confidence to follow your plan knowing that the odds in your favor.

This is all a part of proper risk management if you are a trader and wanting to make profitable trades. Trading without this is a path to losing money and destruction. Bond and stock trading or for that matter any market has its inherent risks. Volatility can set and change markets crashing or make them go up. Overall, investors need solid advice before they enter a trade and learning the sector they are trading will accomplish this.