Sensex down by 333 points

The BSE benchmark sensex was down by 333 points in early trade on Monday on all-round selling pressure from operators and investors as asian shares slumped amid rising fears of a Greek sovereign default and worries over China's financial health. The BSE benchmark sensex resumed lower at 16.255.97 points and dropped further to 16,088.98 before quoting at 16,121.21 1015 hours, a net loss of 332.55 points, or 2.02%, from last weekend's close. The stock market is likely to move in a narrow range this festive week, ahead of second quarter earnings' report card from India Inc. Participation is likely to remain los, and the market is closed on thusday due to Dussehra. Government's sudden borrowing programme has not gone down well with the market participants. To meet its expendititure in the second half of the fiscal, the Centre had decided to borrow an additional Rs.52,800 crore from the market, over and above the Rs.4.17 lakh crore estimated earlier. The Bombay Stock Exchange benchmark sensex continued to trade lower by over 270 points at the pre-close session today on sustained selling by funds and retail investors due to weak global cues. Stock markets worldwide were hit by news that Greece would not be able to contain deficit despite 30,000 job cuts.

Importance of stocks

A stock is a small share that represent a partial ownership of a company. Stock or issued by companies to raise capital every stock is limited to a particular number of shares. Investors buy stocks with the belief that the company will grow continuously or two raise the value of the share. Accruing stock from a new company is consider more risky then buying shares from well-established company but only those company which are list on public exchange like the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotation system (NASDAQ)  are capable for stock trading. The share from the companies listed on public exchange can we bought and sold on open market. The stock market is one of the most important source for companies to raise money. This allows business to be publicly traded or raise additional financial capital for expansion by selling share of ownership of the company in public market.

Reduction about stock prices

To know about the future stock prices there are some important points which is helpful to predict the stock prices.

1. Be aware of all the news which is related to market you would be very much carefull about the company condition whose stocks you wish to buy.
2. Good stock research is key thing to get success in the stock market.
3. Study about the chart pattern is very important for those who are interested in stock trade. Chart pattern help to understand the weakness and strengthen of the stock to predict to future price targets.
4. Observe the volume of stock on a daily basis and calculate the percentage rise or fall in the increase volume trade.

Recent facts about Indian stock market

1. SENSEX claims 212 points to trade near 16,900 points. 
2. SENSEX traps up 153 points and Sterlite Industries gainer.
3. SENSEX trading up 50 points and SBI most active.
4. SENSEX flat with optimistic bias at open.
5. Rupee gains 17 paisa in opposition to US dollor. 
6. Soya Bean future trade mixed on weak global cues.

Introduction of Stock Market

Indian stock market like Casino

Up and Down in Indian Stock Market

Just like a casino, Indian stock markets are highly volatile and speculative. It is true that speculation is a feature of any market and perhaps more of stock market than others. Indian stock markets are most volatile in the world. The ratio between turnover and market capitalization shows the volatility of Indian stock market. As the table shows only in technology specific NASDAQ of US is this ratio higher than in India. More importantly marketing countries with the level of development comparable to India - Thailand, Malaysia and Mexico have ratios, which are only a small fractions of India ratio.

National Stock Exchange

Corporate of India, all Insurance corporation, selected commercial banks and other incorporated made the NSE (National Stock Exchange) in 1992. Trading at NSE classified under two :
1. Whole sale dept market ( similar to money market operations.)
2. Capital Market

There are 2 types of players in NSE:
1. Trading members - recognized members of NSE who trade on behalf of themselves and their clients.
2. Participant - It is like a banks who take direct settlement responsibility.

Trading in Indian Stock Market

Trading in Indian stock market is limited to securities of public limited companies. It is divided into 2 categories. 1. Specified securities ( forward list)
2. Non-specified securities (cash list)

There are two types of transactions carried out on Indian stock market.
1. Spot delivery transaction (delivery and payment within time not more than 14 days)
2. Forward transaction (delivery and payment with 90 days)

A number of broker in an Indian stock market act as an agent by selling securities on his own risk but in New York and London stock market where a member can act as a jobber only.

Insider Trading in Indian Stock Market

Ups and Down in Indian Stock Market

One common method of rigging the market is insider trading. Here selected brokers take decision on which stocks to trade based on information passed on to them by people inside companies often company management themselves such information is not yet available to the public at large or other brokers. Circular trading by which a group of brokers colludes to ring the price of the share up or down is another common practice. For example: a broker can commit to sell shares of a certain company to a designated buyer 5days later at say Rs.100 per share. The deal having been struck, the broker colludes with other friendly to friendly brokers to trade in that scrip over the next 4days, each broker sell the scrip to another at successively lower prices. This process can be earned on with the shares going around circles till the price has been beaten down to the target price to Rs.80 on the 5th day the broker can pick up the lakh of shares at Rs.80 each from the market and sell them earlier committed buyer at Rs.100 each. He does make a neat killing of Rs.20 lakh on the entire deal minus some relatively minor cost incurred in the process of circular trading. The SENSEX eventually recorded from the volatility on Oct 10 2006 closed on 12926.18 points.

Participatory notes (PNs) & Volatility in Indian Stock Market

PNs were entering in large volumes and this inflow increased after the federal reserve cut the interest rate on 18th sep 2006 basically to support the American economy.This gave an additional incentives to foreign funds to enter Indian Stock Market by taking PN rout. Due to PNs the Indian Stock Market became volatile and touches the SENSEX at a highest points.

SENSEX rose in a matter of few months from 16000 to 21000 points. The bulls are so optimistic that the SENSEX would even touch 25000 before the end of the fiscal year (March 2008). SEBI(Security Exchange Board of India) and the finance ministry got alarmed at the dizzy raise of the SENSEX and blamed PNs as the major factor for this right.
SEBI wanted all FIIS to register with it and enter the Indian market directly and not take the illegal PNs route. No PNs will be allowed due to this restriction the SENSEX fell nearly 2000 points. The market regulator has at best been a completely watcher of Indian Stock Market.

From 17 to 19 Oct 2007 interesting things in these 3 days in SENSEX were -

Approximate inflow into Indian Equities through PNs	$32.4 Billion
Loss to PNs holders	Rs.10000 crores
Loss in market value of Companies in which holders of PNs held shares	Rs.200000 crores
Total market capitalization of the company	Rs. 2200000 Crore