Ki

ranPal
atas
ingh

Speculat
ion
I
nSt ock
Exchange

h
I
sItT
aG a me or
fGa mbling! !

g
heSt
ockMaketi
sadevi
cefor
t
rans
fer
ringMoneyf
romthei
mpat
ient

i n
t
othepati
ent

t a s
a l a
n P
i r a
K
 g h
GandhiI
nst
it
utef
orTechnol
ogi
cal
Advancement
,Bhubanes
war

si n
a
AREPORTON

l a t
a
SPECULATI
ONI
NSTOCKEXCHANGE

P
(
ISI
TAGAMEOFGAMBLI
NG?)

r an
i
By

K
Ki
ranKumarPal
atas
ingh
Regdno-

ODI
SHACAPI
TALMARKETANDENTERPRI
SELI
MITED
(
FORMERLYKNOWNASBHUBANESWARSTOCKEXCHANGE)

Gui
dedby
Mr
.Bi
pinBi
har
iDut
ta
As
sis
tantManager
Odi
shaCapi
tal
Mar
ket&Ent
erpr
iseLt
d.
(
For
mer
lyknowsasBhubanes
warSt
ockExchange)
 g h
si n
at a
a l
n P
i r a
K
 AUTHORI
SATI
ON

Therepor
t“SPECULATI
ONI
NSTOCKEXCHANGE:I SITAGAMEOFGAMBLI NG”i ss
ubmit
ted
byKI
RANKUMARPALATASIGH,astudentofGANDHII
NSTITUTREFORTECHNOLOGI CAL
ADVANCEMENT,BBSRbear
ingenr
olmentnumber xxxx,apart
ial
ful
fi
ll
mentofMBAprogram
ofGI
TA,BBSR

g h
si n
a t a
l
Pr
of.SaiKi
shor
ePadhi Mr
.Bi
pinBi
har
iDut
ta

a
Cour
seCoor
dinat
or,MBA As
sis
tantManager

P
GITA,BBSR Odi
shaCapi
tal
Mar
ket&

n
Enter
pri
sesLt
d.

i r a
K
 TABLEOFCONTENTS

AUTHORI
SATI
ON 2
ABSTRACT 5
ACKNOWLEDGEMENT 6
LI
TRATUREREVI
EW 7
1
.INTRODUCTI
ON 9
1
.1St
ockExchangeObj
ect
ives 9

h
1
.1
.1Oper
ati
onal
char
act
ersf
ort
radi
ngi
nshar
esands
ecur
iti
es 9

g
1
.1
.2Regul
ator
yChar
act
er 1
1

i n
1
.1
.3Pr
omot
ional
Char
act
er 1
1

a s
1
.2Publ
icut
il
it
ydi
schar
gingchar
act
ert
hat- 1
1

t
2.I
NVESTORVSSPECULATORI
NSTOCKMARKET 1
2

l a
Specul
ator
sasDayTr
ader
s 1
3

P a
Shor
tSel
l
ing&I
tsI
mpl
icat
ions 1
4
Shor
tSel
l
ingPr
oces
s 1
4

an
Ti
mingt
hes
hor
tsel
l 1
5

i r
Shor
tsel
l
ingi
nIndi
ans
tockmar
ket 1
6

K
Mar
ginTr
adi
ng 1
6
Mar
ginMai
ntenanceRequi
rement 1
7
3.FORECASTI
NGSTOCKPRI
CEMOVEMENT 1
8
Fundament
alAnal
ysi
sVs
.Techni
cal
Anal
ysi
s 1
8
TheTechni
cal
Anal
ysi
shas3bas
icPr
inci
ples
: 1
9
Otherf
act
orst
hatl
eadani
nves
torandas
pecul
atort
ofor
ecas
tst
ockpr
icemovementei
ther
way: 1
9
Economi
cGr
owt
h 1
9
Cor
por
ateFi
nanci
alRes
ult
s 20
4.SPECULATI
ONI
NSTOCKEXCHANGE 27
4.
1Pr
osandCons 27
5.
CASESTUDY 28
5.
1.The1
0mos
tact
ivel
ytr
aded(
highl
iqui
d)s
tocks
: 28
5.
2.Over
all
Mar
ketAnal
ysi
s 28
 I
ndi
vidual
StockTr
endAnal
ysi
s 32
TATAMOTORS 32
SUNPHARMA 33
HDFC 34
COALI
NDI
A 35
BHARTI
AIRTEL 36
6.
Bus
ines
sSt
atusofSt
ockExchange 37
7.
Rel
ianceI
ndus
tri
esLi
mit
edSt
ockPr
iceCas
eSt
udy 46

h
I
NTERPRETATI
ON 51

g
CONCLUSI
ONS 52

i n
REFERENCE 53

t a s
a l a
n P
i r a
K
 ABSTRACT

Thi sr epor tfocus esont hes peculativenat ureoft hes tockmar ketinI ndia,
Emphas izingt hebas i
cr ulesandr is
ksas sociatedwi ths t
ockt ransact i
ons .Ont heone
hand,t hes pecul ati
venat uremaybecons ideredasamandat oryfeat ureoft hes tock
mar ket ,f orthepur posesofs uppor tingaf airandef ficientf uncti
onings tocks ystem

h
.Stocks pecul ationsar es uccessives elling-buyi ngs ecur it
iesoperat i
ons ,aimi ngfor

g
pr ofitfr oms tockexchanger atesdiffer ences .Theunder lyingpr i
nciplei sthatofany

i n
stocks pecul ationbus ines s:buyl owands el l
high.Whatchar acterizess tock

s
specul at i
onsar et hepr ofitsthes pecul at ors eeksandt her i
skheas s umesknowi ngly.

t a
Thi sr iskder i
vesf r
omt hef actthatcur rencyevol utioncannotbepr edi ctedwi th

a
cer taint ybyt hes peculator .Ont heot herhand,t het er m" speculative"canbeal so

l
inter pret edi nanegat i
vedi recti
on,i .e.i ncombi nationwi thmar ketmani pulati
onor

a
mar ketabus e.Rel atedt ot hislatterint erpr etati
on,t hes t udyr ef
erst oIndi anlegislat
ion

P
onmar ketabus e,accept edmar ketpr act i
cesandt hos et hatcons titutemar ket

n
mani pul at i
on.

i r a
K
 ACKNOWLEDGEMENT

g h
Ther
esear
chworkasitstandstodayisthesi
ncerecont
ribut
ionsofafewspiri
tedindi
vidual
s.I
t
woul
dbeunfai
rtonotrecognizethei
rcontr
ibut
iontothewor k.I
herebyacknowledgethose:

si n
IwouldliketothankOdi shaCapi talMarketandEnt er
prisesl
imit
ed(Formerlyknownas

a
Bhubanes warStockExchange)f orallowingust oconductoursummerinternshi
ppr ojectunder

t
theumbr el
laoftheor ganizati
on.I t
akethisoppor t
uni
tytoexpressmys i
nceregr ati
tudetomy

a
companygui de,Mr .BipinBihariDutta,Assi
stantManager ,Odis
haCapitalMar ketand

l
Enter
pr i
sesli
mited(FormerlyknownasBhubanes warStockExchange)
,forhisout s
tandingand

a
undeniableconsiderati
onstomyeager ness.

P
Humbl
y,hestoodbymeallt
heti
met ohelp,gui
de,andmentormeateachstageofmywork.

n
Heputhi
sbesteff
ort
stogui
deustowardsthepathofres
ear
chworkandr emindi
ngmeevery

a
nowandthenontheiss
ueswhi
chhelpedtoaccompli
shthet
as kwi
thgreats
uccess.

K i r
 g h
si n
a t a
a l
n P
a
LI
TRATUREREVI
EW

K i r
.Spe
1 cul
ati
veTr
adi
ngandSt
ockPr
ices
:Evi
dencef
romChi
nes
eA-BShar
ePr
emi
a
(2009)
BY:.Jianpi
ngMei ,CheungKongGr aduateSchoolofBus i
ness,JoseA.Schei
nkman,
DepartmentofEconomi cs
.PrincetonUnivers
ity.Pr
inceton,NJ08540.USAandWei
Xiong,DepartmentofEconomi cs,Pri
ncetonUniver
sity.Pri
nceton.NJ08540.USA
2.LimitedArbi
trageinEquit
yMar ket
s(2002)

L3Y:MarkMi t
chell
,ToddPul vi
noandErikSt
afford
Thes t
udyexamines82s it
uati
onswherethemar ketval
ueofacompanyi sl
essthanits
subsi
diar
y.Thesesituat
ionsi
mpl yar
bit
rageoppor t
unit
ies,pr
ovi
dinganideals
etti
ngt os
tudy
theris
ksandmar ketfri
cti
onsthatpr
eventar
bitrageursfr
omi mmediat
elyf
orci
ngpr i
cest
o
fundamental
values.

3.Excess
iveSpeculati
oni nCommodi t
yMar ket
sandTheCol laps
eofMar ket
Fundament al
is
m( 2009)
BY:Dr.Mar kCooper
Thedebat eaboutwhet herexcess
ivespeculati
oncontr
ibut
edt otherun-upi ncommodity
pri
cesisover.Therepor t
softhiscommitteeonoil,nat
uralgasandmos trecent
lywheat,as
wellasmyownanal ysesofoilandnaturalgas,nottomentiondozensofothers,l
eaveno
doubtt
hatexces
sives
pecul
ati
onwasani
mpor
tantcaus
eofpr
obl
emsi
ncommodi
tymar
ket
s.

4.TheHar mf romInsi
derTradingandI
nfor
medSpeculati
on(1 989)
BY:Mi chaelManove
Thispaperadvancest hecommonlyhel
dviewthati
nsidertradersandinf
ormed
Speculatorsappropri
atesomepartoft
heretur
nstocorporateinvest
mentsmadeatt
he
expenseofot hershar
eholder
s.

5.Repor
tofTheDayTr
adi
ngPr
ojectGr
oup:Fi
ndi
ngsandRecommendat
ions(
1999)

BY:Nor
thAmer
icanSecur
iti
esAdmi
nis
trat
orsAs
soci
ati
on

Thisreporti
sprimari
lyint
endedt oas s
iststates ecuri
ti
esregulat
orsinunderst
andi
ng,and

h
respondingto,t
heissuesposedbyt hedayt radingindust
ry.Itmayal s
oserveasawor dof

g
cautionfort
hosewhobel ievethatdayt radingof fer
savar i
ablecareeropport
uni
ty,orthat

i n
freneti
cisanalt
ernati
vetopr udent,diversi
fied,longterminvesti
ng.

s
6.Ther
oleofs
tockexchangei
ncor
por
ategover
nance(
2009)

t a
BY:HansChr
ist
ians
enandAl
is
saCol
der
stova

l a
Thearticleisstr
ucturedinthefoll
owingmanner .PartIdis
cussesthemainmeansatt he

a
dis
posal ofstockexchangest ohel
penhancet hecorporategovernanceoftheirl
is
ted

P
compani es.PartII
int
r oduceschal
lengestothi
stradi
tionalrol
eexchanges,dis
cussi
ngthe

n
possi
bler amifi
cati
onandl ist
ingofexchanges.

a
7.Fact
orsi
nfl
uenci
ngLi
qui
dit
yinEmer
gingMar
ket
s(2007)

i r
BY:I
OSCOEmer
gingMar
ket
sCommi
tt
ee

K
TheEmer gingMarketsCommit
t ee(EMC)approvedamandat et
oexaminethefactor
sthat
aff
ectli
quidityi
nemer gi
ngmarketstobeconductedbytheEMCWor kingGrouponRegulati
on
ofSecondar yMarket
s.Thedetail
edtermsofr
ef er
enceoft
hismandat
ewer esubsequent
ly
approvedbyt heEMCAdvi s
oryBoar dduri
ngitsmeeti
nginFeb2006.

8.TheEff
ectsofI
nves
torSent
imentonSpecul
ati
veTr
adi
ngandPr
icesofSt
ockandI
ndex
Options(
2008)

BY:Mi
chael
LemmonandSophi
eX.NI

Thisst
udytakesas
teptowar dsfeel
ingt
hisvoi
dbylinki
ngspecul
ati
vetr
adi
ngbehavi
ori
n
equit
yopti
onstomeasuresofinvest
orsenti
mentsandexamini
ngtheext
entt
owhich
senti
mentr
elat
edtr
adingaffect
soptionpri
ces.

9.Techni
cal
Anal
ysi
s:Moder
nVi
ews
.(201
6)

BY:CFAI
nst
it
uteRes
ear
chFoundat
ion

Techni
cal
Analys
ispr
ovi
desafr
ameworkfori
nfor
minginvest
mentmanagementdeci
si
onsby
applyi
ngasuppl
yanddemandmet
hodologyt
omar ketpri
ces.
1
0.TheRel
ati
ons
hipbet
weenTr
adi
ngVol
umeandSt
ockRet
urns(
2000)

BY:Chandr
apal
l
aPat
hir
awas
am

Thiss
tudyexami
nestherel
ati
onshi
pbetweentr
adi
ngvolumeands t
ockret
urns
.Thesampleof
thest
udyconsi
stsof266st
ockst
radedatCol
omboStockExchange(CSE)f
rom2000-2008

g h
si n
a t a
a l
n P
i r a
1
.INTRODUCTI
ON

K
Speculat
ionistheactoft r
adinginanas s
etorconduct ingaf
inanci
altransact
iont
hathasa
si
gnif
icantriskoflosi
ngmos toralloft
heinit
ialoutl
aywi tht
heexpectati
onofas ubs
tant
ial
gainwi t
hs pecul
ationtheris
kofl ossi
smor et hanoffs
etbythepos s
ibil
it
yofahugegai n;
other
wi s
etherewoul dbeveryli
tt
lemoti
vati
ons pecul
ate.

I
tmays ometi
mesbedi ff
iculttodis
tinguishbetweens peculat
ionandi nves
tment,andwhether
anac ti
vit
yqualif
iesass pecul
ati
veori nvestingcandependonanumberoff actor,i
ncl
uding
thenat ur
eoft heas set
,t heexpect eddur ati
onoft heholdingper i
od,andt heamountof
l
everage.Speculator
scanpr ovi
demar ketliqui
dit
yandnar row thebidas kspreadenabl
ing
producerstohedgepr i
cer is
keffi
ciently.Speculati
ves hort
-s el
l
ingmayal sokeepr ampant
bull
is
hnessincheckandpr eventthef or
mat i
onofas setpri
cebubbl e.

Speculation consti
tutes80% oft hevol umet raded int hemar keton dai l
ybas isthrough
i
ntradayt r
ading,whi chals
os i
gnif
iest heimportanceofi ntradayt radingforhighmoment um
andbet terpr i
ceDi scover
yf orthes tocki nthemar ket.Aheal thymar ketals
ocompr i
sesof
speculatorsast heys t
udythes hortt er
m movement sofi nvestmentofi nvestmentmar ket
s
whichar er el
atedtot hegl
obalmar ketonl argescal
e,theyals oplayver yimportantrol
esinthe
mar ketbyexces sri
skandpr ovidi
ngmuchneededl iqui
dityint hemar ketbybuyi ngands el
li
ng
whenot
heri
nves
tor
sdon’
tpar
tici
pat
e.

Thes tudyemphas i
zesthejointeffec tsofs hort-salesconstraintsandhet er
ogeneousbel i
efson
stockpr i
ces.whenheabi l
it
yofar bit
r ageurst os hortovervalueds haresisl
imit
ed,themar ginal
buyerofs har
est endstobeanopt i
mi stthisint r
oducesas peculati
vemot i
veamongi nvestors
anas setownerhast heopt i
ont or esellhiss harest oothermor eopt i
misti
cinvest
orsi nt he
futureforapr ofi
t,andequi li
brium pr i
cesr eflectsthisoptiont ypical
ly,asthevolatili
tyt he
resaleoptionalsoincreases.Thisr esult
si napos it
iveassociationbet weenreadingvol
umeand
prices.Butitsti
llremainsanar eaofpas si
onat ecr i
tici
sm.Findi ngitsprosandconswi llbet he
areaofs tudy.

h
1
.1St
ockExchangeObj
ect
ives

i n g
 To provi
de a f
air
,trans
par
entand ef
fi
cients
ecur
iti
esmar
kett
oinves
tor
sus
ing

s
el
ectr
onictr
adi
ngsyst
em.

t a
 Toes
tabl
is
hnat
ionwi
de t
radi
ngf
aci
li
tyf
orequi
ti
esanddebti
nst
rument
s.

l a
 To ens
ureequalaccesstoi
nves
tor
sal
lovert
hecount
ryt
hrough an appr
opr
iat
e

a
communicat
ionnet
work.

P
 Toi
mpr
ovet
hes
tandar
dofs
ecur
iti
esmar
kett
oint
ernat
ional
level
.

r an
i
1
.1
.1Oper
ati
onal
char
act
ersf
ort
radi
ngi
nshar
esands
ecur
iti
es

K
Let
’sl
ookatt
het
radi
ngi
nfr
ast
ruct
ureatas
tockexchanget
aki
ngdi
ff
erentf
ormsal
toget
her

DayTr
adi
ng
Al
so,knownas‘i
ntraday’,positi
onsareusuall
yenter
ed&exitedwithi
nthesametradingday
.Obvi
ousl
yscal
pingfi
tsintothiscat
egory.Trader
singener
alarei
nteres
tedi
nquicker
,s mal
l
er
amountandmaki
ngmul ti
pletraderperday.
Advant
ages
:

1
. Smal
l
ert
akepr
ofi
ttar
get=s
mal
l
err
iskpert
rade.

2.Compoundi
nghasagr
eat
eref
fectonover
all
prof
it
s.

3.Thebr
oker
ager
equi
redf
ort
radi
ngi
sver
yles
s.

4.Nodel
iver
ychar
ges
.

5.Ri
skcont
rol–pos
iti
onsar
ecl
osedoutover
nights
ounexpect
edmar
ketchangeswi
llnot
af
fectyourbot
toml
ines
.
Di
sadvant
ages
:

 I
nves
tor
scanl
osemoneyf
ast
er.

 Ti
mecons
umi
ng–ver
ydi
ff
icul
ttot
radepr
oper
lyi
fonehasaf
ull
-ti
mej
ob.

 Fas
tpace&neces
sar
yconcent
rat
ioncanmakedayt
radi
ngver
yst
res
sful
.

 Di
sci
pli
ne,propermoneymanagement,r
isk/r
ewardand aprofi
tabl
esys
tem areal
ot
morei
mportantwhendaytr
ading.Evenas mall
mis
takecanr
esul
tinahugel
os s
.
Swi
ngTr
adi
ng
Swingtradi
ngisashor
t-t
ermstr
ategyus
edbytrader
stobuyands el
lst
ockswhos
etec
hni
cal
i
ndicat
orssugges
tanupwardordownwardt
rendinthenearf
utur
e,general
l
yonedaytot
wo

h
weeks.

n g
Advant
ages
:

si
 Manageabl
etakepr
ofi
tands
topl
oss
es.

t a
 Les
sti
mei
nvol
vedi
nact
ivel
ytr
adi
ng.

l a
 Les
sst
res
sful
thani
ntr
adayt
radi
ng.

a
Di
sadvant
ages
:

P
Needtopayfullamounttopurchasethestocks.

an
Susceptibletomarketdisasters.

K i r
Canbedifficulttolearnandbecomeprofitable.
While itrequireslesstime than day- trading,preparation and analyzing the
mar
ket
siss
til
lneces
sar
yandcanbet
imecons
umi
ng.

Pos
iti
onTr
adi
ng:

Posi
ti
ontradi
ngfol
lowintermediatetrends
.pos i
ti
ont r
adersusef
undamentalanalysi
stos el
ect
buycandidat
esandtechnicalanalys
istopinpointthecorr
ectbuypoint
s–br eakout.Theybuy
astockandholditforthedur ati
onoft hetrendtypical
lysever
almonths
,andi gnoreshort-
ter
mf l
uct
uati
ons.

Advant
ages
:
  Themostfor
givi
ngtypeoftr
ading-smallmi
stakesar
emor
eeas
il
yabs
orbedi
nmar
ket
movementandthes
izeofyourevent
ualprof
it
.

 I
tises
timat
edt
hatupt
o25% ofpos
iti
ont
rader
slear
ntobecomepr
ofi
tabl
e.

 Eas
iert
obecomes
ucces
sful
wit
hsmal
l
ers
tar
t-upcapi
tal
.

 Muc
heas
iert
opr
edi
ctt
hemar
ketasi
ngener
alyouwi
ll
bef
oll
owi
ngt
heover
all
trend.

 Les
sti
mecons
umi
ngt
handayt
radi
ng.

Di
sadvant
ages
:

 Compoundi
nghasal
otl
essef
fectonpr
ofi
tthanbot
hint
radayands
wingt
radi
ng.

g h
 Becaus
epos i
ti
onsc an behighl
yleveraged and t
radesremai
n open f
orext
ended

n
peri
odsoft
ime,unablet
oreapconsi
stentbenef
it
sofint
eres
t.

si
 Ther
eisi
nher
entr
iski
nkeepi
ngpos
iti
onsopenover
night
.

t a
 Moneycanbetiedupforanext
endedper
iodoft
ime.Thi
scanpr
eventent
ryi
ntonew

a
pos
iti
onsast
heyari
se

a l
1
.1
.2Regul
ator
yChar
act
er

n P
 Afair,t
rans
par
entandef
fi
cientmar
keti
sneededf
ort
hes
tockss
othatt
hei
nves
tor
s’

a
conf
idencei
sal
lti
mehi
gh.

i r
 Anor
der
lyandr
egul
atedmar
ket
.

K
1
.1
.3Pr
omot
ional
Char
act
er

 Faci
l
itat
esmobi
li
zat
ionofs
mal
lsavi
ngsi
ntoi
nves
tment
.

 Pr
omot
esi
ndus
tri
ali
zat
ion.

 Wor
kfori
nves
torpr
otect
ion.

1
.2Publ
icut
il
it
ydi
schar
gingchar
act
ert
hat-

 Spr
eadsequi
tycul
tur
eamongi
nves
tingpubl
ic.
 Campai
gnsf
inanci
all
it
eracyf
orf
inanci
ali
ncl
usi
on.
 War
rant
sinves
tingpubl
ict
obef
inanci
all
yli
ter
atef
ort
aki
ngpr
udenti
nves
tmentdec
isi
on.
 Cont
ribut
est
oeconomy.
 g h
si n
2.I
NVESTORVSSPECULATORI
NSTOCKMARKET

a t a
l
Theinvestorwantst oownas setsontheass umpti
ont hatifbusinessesorpropert
iesgenerat
e

a
retur
nsoverandabovei nfl
ati
onovert i
met henbyowni ngacol lect
ionofthesebus i
ness
esor

P
propert
ieshe/shewillobt ai
nthes er
etur
ns.Ascor porateearningsr i
seovertime,t heval
ueof
thesebusinessinaggr egateal s
or i
sestor efl
ect
ingt heriseincor porateprofi
ts,i mpr
oved

n
producti
vityandli
vings tandardsamongot herfactors
,theamongot herf
actors
,thelongterm

r a
retur
nsf r
om t hedevel
opedmar kethasbeeni norderof9-10% perannum.

i
However,t hislogiconlyholdst r
uei fbusinessesquot edont hemar ketareval uedats ensibl
e

K
pri
c esinrel
ati
ont ot hei
rearningandr el
at i
vet ot hevalueont heof f
erinot heras setclasses,
And t hi
swher et her ealdif
ficul
ti
ess tartf ort hei nvestor.f ori ftheover allmar ket(
s)is
over val
uedthen,eveni fcorporatepr of
itsr emainheal thy,r eturnst oinvestorscans ti
llbe
poorornegat i
veoverext endedper iods.therei sli
ttl
edoubtt hats tockmar ketswer ever yover
valuedatt hes tar
tof2000andt hisoverval uation( andabui ld-upofdebti nt hes ystem
subsequentl
y)ledt ot womajorbearmar ket sint hes paceofei ghtyear sandt hesubs equent
decadeofpoorr eturns.

Thes peculat
or(ort r
ader )
,ont heot herhand,car eslit
tl
eaboutwhatunder pinsthel ongt er
m
progressofmar kets.Thes peculatorisonl yinterestedinwhatot heri nves t
orsaredoi ngand
how thataf f
ectsthedi rectionofshar epr icemovement sint heshor tterm.Andt hes peculator
hasampl eoppor tuni
ty.i tiswellrecogni zedt hatmar ketsareex tr
emel yemot ionalint heshort
term –wi t
ht hewi l
ds wi ngsampl i
fyingt hechangesi nunder lyi
ngbus i
nes sconditionsbot hon
the upside (bul
lmar ket)and t he downs i
de ( bearmar ket).Ift he pr evail
ing sent i
menti s
univers
allybull
ishhe/s hewi ll
attemptt opr ofitfromr isi
ngpr ices
.Hence,s hortter
ms harepr i
ce
movement sarethes olef ocusoft hes peculatorsat tenti
ons .Andt hebes twayt os tudys hare
pri
c emovementi sbyexami ni
ngpr ic
echar tsandpr i
cet rendsofonef ormoranot her.

Thedif
fi
cult
yforspecul
ators
,however,isthattheyaredeali
ngwit
hzeros
um game.Aswe
haveal
readystat
ed,thespecul
atorort
raderlookstogetaretur
nfr
om t
hes
tockmarketona
shortterm vi
ew.Butt hest
ockmar ketsdocreateweal thonaterm vi
ew.Sai
danotherway.
Themar ketsazerosumgamei nthes hortt
erm.itisthemediumtolongter
mthatt
hemar ket
s
generatewealthaseconomiesandbus i
ness
estherei
ngr ow.

Hence,ifmar ketsar eazer osum gamei nt hes hor ttermt hencl ear
lyforspeculators,asa
group,thes um ofal lgainsandl ossesmustbezer o,ornegat iveaf t
ertradi
ngcos t.Aswar r en
Buffet
t,theiconicchai rmanofBer kshi
reHathaway,agai nsoel oquentl
yputit–s tockmar ket
specul
atingisl i
kepoker–s omes peculator
swi n,somel os ebutnonewmoneyl eavest heroom.
Undoubtedly,s omes pecul at or
scanwi natplayingt hes hortterm gamebutt hoset hatdoar e
l
ikel
yt obeei therprofessionalt raderthatarepr eparedt oputi ntheeffortr
equiredt osucceed
atthegame. Andt heeffor tandexper i
encer equirediscons i
der ableandiscompl etelyunder
esti
matebyt heor di
narypr ivateinvest
or.

h
Thecombinat i
onofhighercos t
sincur
redt hr
oughregul
artr
adi
ngandlackofdi
sci
pli
nemeans

g
thatthemajorit
yofspeculatorsareal
mos tcert
aint
olosemoneyovert
imeor,i
naconstant
ly

i n
ris
ingmarket,togenerat
er etur
nslowerthantheoff
er.

a s
I
nmanycas es,di
fferentiati
onbet weens impleinvest
ment sands pecul at
ioni sdiff
icul
t,although

t
theobj ect
ivesaredi fferent
.Bys impleinvestmentswes eekobt ainingi ncomeandi nvestment

a
securi
ty.However ,as impleinves t
ment ,bywhi chwer epur chaseds ecuri
tiestobes tored,wil
l

l
becomeas pecul
at i
oni ftheses ecurit
iesarequi ckl
ys oldforpr ofi
t.Thes amehappensi nthe

a
reversecas e,ass tatedGeor geSor os–t hegr eats peculatorsar eencount ered: thos ewho

P
speculateratef l
uctuat i
ont owar dstheaver ager ateforcer tainper iod,thos ewhos pecul
ate

n
ratec hangesf r
om onedayt oanot her,long–t er
ms peculators,whoai mt her atechanges

a
recordedforlongeroft i
me.

K i r
Specul
ator
sasDayTr
ader
s

Dayt raderkeyonanyevent sthatcreateashor tt

erm movement sinthemar ket.Tr
adingthe
newsi spopulartechni
quet hatdayt raderuse.Whens chedul
edannouncement sregar
ding
economi cst
ati
sti
cs,corporat
eearni
ngsori nt
erestrat
es,anddoon,ar eannounced,thereare
al
waysexpect at
ionsby mar ketpar t
ici
pants.When t hose expectat
ionsar e notmet,or
exceeded,marketsusuall
ymakes uddenandl argemoves ,whichdayt rader
sat t
emptt osei
ze
upon.

Anot herpopularmet hodisfadingthegapatt heopen.Whent heopeni ngpr iceshowsagap

wi t
hr especttothepr i
ordaysclosi
ng,taki
ngapos it
ionintheoppos i
tedi recti
onsoft hegapi s
knownasf adi
ngt hegap.Fordayswhent herei
snonews ,ortherearenogaps ,dayt raders
wi l
lmakeadet erminati
onearl
yi nthedayast owhichgeneraldirect
iont hemar ketismovi ng.
I
ft hemar keti
smovi ngupwar d,dayt r
aderbuys ecuri
ti
esthatar eexhibi t
ingstrengthwhen
theirpricesdip.Ifthemarketismovi ngdownwar d,dayt r
aderswi l
lshor tsecuri
tiesthatar e
exhibiti
ngweaknes swhentheirpricesbounce.Thereareasmanymet hodsast hereareday
traders.

Unl
ikei
nves
tor
swhous
efundament
aldat
atoanal
yzet
hel
ong–t
erm gr
owt
hpot
ent
ialofa
cor
porati
oninor
dertomakeadeci
si
ont
otakeal
ongpos
iti
oni
nit
ssecur
ity,adayt
raderi
s
moreconcer
nedwit
h:

 Pr
iceact
ionchar
act
eri
sti
csoft
hes
ecur
ityi
tsel
f.

 Pr
icevol
ati
li
tyandaver
agedayr
angear
ecr
iti
cal
toadayt
rader
.

 Asecur
ityneedst
ohaves uff
ici
entpr
icemovementoverthecour
seofat
ypi
caldayi
n
or
dertoatt
empttocapt
uresomeofthatmovementf
orprof
it
.

 Vol
umeandl i
quidi
tyar
eals
ocr
uci
altoadayt raderi
nthatent
eri
ngandexi
ti
ngt
rader
s
qui
ckl
yisvi
talt
ocaptur
ings
mal
lpr
ofi
tspert
rade.

g h
 Secur
iti
eswi
ths
mal
ldai
lyr
angeandl
ightdai
lyvol
umear
enotwel
lsui
tedf
ordayt
radi
ng.

si n
a
Adayt raderoftenclosesoutalltradesbef oretomar ketclos
eanddosnothol danyopen

t
positi
onsover ni
ght.Somedayt r adersusel everaget 0magni fytheret
urnsgeneratedfr
om

l a
smallstockpri
cemovement s.Openingr angesalsoi ndicatehowt hemarketwil
lper
formforthe

a
day,asawhol e.Dayt r
adersmaybas etheirtradingdeci sionsf
ortherestofthedayonhow
currentpricerelat
etoopeningrangepr i
ces.Somet echnicalanal
ystsl
ookforopeningrange

P
breakoutstoinformthei
rtradi
ngdeci s
ions.

r an
K i
Shor
tSel
l
ing&I
tsI
mpl
icat
ions

Shor tsel
l
ingmakesi tpos si
blet osellwhatonedoesnotown,bybor rowingstheassetor
inst
rumenti nquesti
on,selli
ngi t,andt henbuyi ngitback( hopeful
lyatacheaperpr i
ce)to
replacethebor r
owedas sets.Ast hes ell
erdoesnotownt heas sets
,theprocessofsel
li
ngit
createas hortposi
ti
on(t
hi nkofi tasas hortf
all
)thatmustevent uall
ybecover edbybuyi
ngit
backont hemar ket.Thedi f
ferencebet weentheiniti
alsal
epr i
ceandt hepriceatwhichthe
assetwasbr oughtbackr
epr esentsthes horts
ell
ersprof
itorloss.

Shortsell
i
ngisalsoknownas“s hort
ing” ‘s
ell
ingshort’or“goi
ngshor
t”t obes
hor
ta
secur
iti
esoras
seti
mpli
esthatonei
sbeari
shonitandexpectst
hepri
cet
odecl
ine.

Shortsell
ingcanbeus edforpur posesofs peculat
ionhedging.Whi l
es peculat
orsuses hor
t
sel
li
ngtoc api
tal
izeonapotenti
aldecli
neinas pecif
icsecuri
tyortheboar dmar ket
.Hedgers
usethestrategytoprot
ectgainsormi t
igat
el ossesinas ecur
ityorportf
oli
o.Hedgef undsare
amongt hemos tacti
veshor
tsell
ers.Andoftenus eshortposit
ionsi
nselectstocksorsect
orsto
hedget
hei
rlongpos
iti
onsi
not
hers
tocks
.

Shortsel
ler
sar eof
tenpor tr
ayedashundredindi
vidual
swhoar ebentonpr of
it
sandwantt he
companiestheytargettofail
.Addi
ti
onall
y,manyinvest
orsvi
ews horts
ell
ingasaninor
dinat
ely
danger
ouss trat
egy,sincetheli
ng–t er
mt rendoftheequit
ymar keti
sgenerall
yupwardand
ther
eistheoreti
cal
lynoupperl i
mitt
ohowhi ghastockcanrise.

Whi l
eshort
ingisi
nher
entl
yris
k,thereal
ityisthatshor
tseller
sfaci
li
tat
esmoothfunct
ioningof
themar ket
sbypr ovi
dingli
quidi
ty,andal soactasar eal
it
ycheckonover hypeds tocks
,

h
especi
all
yduringperi
odsofirrat
ionalexuberance.Stocksmayt radeatsky-highlevelsor

g
absurd

si n
Valuat
ionsi
ntheabs
enceofshortsel
l
er s
’rest
rai
ninginfl
uence,andi
nves
tor
swhobuyi
ntot
he

t a
hypocouldf
acemassi
vel
ossesintheinevit
abl
ecorrecti
on.

l a
Underther i
ghtci
rcums tances,shortsel
li
ngcanbeavi ableandpr ofi
tableinvest
mentstrategy

a
forexperi
encedtradersandi nvestorswhohaveanadequat edegreeofr is
kt ol
eranceandar e

P
famil
iarwithther i
sksinvolvedi nshorti
ng.Rel
ativel
yinexperi
encedi nvestorswouldalsodo
welltolearnaboutt hebas i
caspectofs horts
ell
ingthroughlearningtoolslikethi
stutori
alin

n
ordertoexpandtheirinvesti
ngtoolkit.

i r a
K
Shor
tSel
l
ingPr
oces
s

Let’sdes cri
bewhati smeanstoshortast
ock,start
ingwi t
hwhatitmeanstopur
chaseastocks,
.
I
npur chas i
ngs t
ocks,obuyapi eceofownershipi nthecompany.Thebuyingands el
l
ingof
stockscanoccurwi t
has t
ockbrokerordir
ectl
yf r
omt hecompany.Broker
saremostcommonl y
used.Theys erveasaninter
mediarybet
weent heinvestorsands
ell
ersandof
tenchargefeefor
theirservices.

Whenus i
ngabr oker,youwillneedtosetupanaccount.Theaccountthatyouset
upisei
thera
cashaccountoramar gi
naccount .Acashaccountrequirethatyoupayforyourst
ockwhen
youmaket hepurchase,butwi thamar ginaccountt
hebr okerl
eadsyoutotheport
ionofthe
fundsatt
hetimeofpur chas
eandt hesecurit
yactsascoll
ateral
.

Whenasinves
torgoesl
ongforaninvest
ment,i
tmeanst
hatheorsheboughtas
tockbeli
eving
i
tspr
icewil
lri
seinthef
utur
e.Conversel
y,whenani
nves
torgoess
hort
,heorsheanti
cipat
esa
decr
eas
eins
har
epr
ice.

Whens el
ler
sshortas t
ock,theyaresel
l
ingas t
ockt hatt
heydon’town.Morespeci
fi
cal
ly,a
shor
ts aleofasecur
itythati
sn’townedbythesel
ler
,butthati
tpromis
edtobedeli
ver
ed.That
mays oundconfusi
ng,butit’
sactual
lyasi
mpleconcept.

Whenyous horts ellas ock,yourbr okerwi l

ll eadittoyou.Thes tockiscomef rom the
brokerageowni nventory,fr
omanot heroneoft hef i
rmscust
omers,orfr
omanot herbrokerage
fi
rm.Thes har ei ssoldandt hepr oceedsar ecr edit
edtoyouraccount.Soonerorl ater
,you

h
mus t“clos
e” t hes hortbybuyi ngbackt hes amenumberofs hare(cal
led cover
ing)and

g
retur
ningthemt oyourbr oker.I
fthepr icedrops,youcanbuybackt hestockatthelowerpr i
ce
andmakeapr ofitont hediff
erence.Ift hepri
ceoft hestockri
ses
,youhavet obuyi tbackat

i n
thehigherprice,andyoul os
emoney.

t a s
a
Mos tofthetime,youcanhol das hortforaslongasyouwant,alt
houghi schargedonmar gin

l
accounts,sokeepi ngas hortsal
eopenf oralongtimewil
lcostmor e.Mor eover,youcanbe

a
forcedtocoveri fthelenderwantst hestockyouborrowedback. Br okeragecan’tsel
lwhat

P
theydon’ thave,soyouwi l
lei
therhavet ocomeupwi t
hnews har
est obor row,oryou’llhave
tocover.Thisi sknownasbei ngcal l
edaway,i tdoesn’
thappenoften,buti spossi
bleifmany

n
i
nves t
orsares hortsel
l
ingapar ti
cularsecuri
ty.

i r a
K
Becaus
eyoudon’ townt hestockyou’r
es hor
ts el
li
ng( youborr
owedandt hensoldi t
),you
mustpaythelenderofthestockanydivi
dendsorr i
ghtsdecl
aredduri
ngthecour
seoft heloan.
i
fthestocks
plit
sduringthecourseofyourshort,you’l
lowet wi
cethenumberofsharesathalf
pri
ce.

Ti
mingt
hes
hor
tsel
l

Thet i
mingofas hortsaleisofcri
tic
alimport
ance,si
ncest ockstypicall
ydeclinemuchf as
ter
thantheyadvance.As izeablegai
ninas t
ockoveramul t
i-yearper i
odcanbewi pedoutina
coupleofweeksonanear ningmissorotherbeari
shdevelopment .Thus ,atraderwhoi stoo
l
atet oini
ti
ateas horttrademaymi s
sabi gpartofthestock’sdecl i
ne.Ont heot herhand,
beingtooearl
ymayi tdiffi
cul
ttoholdontotheshortposi
ti
on,es peciall
yifthes t
ockcontinues
toadvance.

Si
tuat
ionswhent
heoddsofs
ucces
sful
l
yshor
tingar
ebet
teri
ncl
udet
hef
oll
owi
ng:
Duringabearmar ket,thedominanttrendforas tockmarketorsectorisdownwar ddur
inga
bearmar ket
.Sot raderswhobelievethat“thetr
endi syourfr
iend“ haveabet t
erchanceofa
makingpr of
itabl
es hortsal
etradesduringanentrenchedbearmar ketthantheywouldduri
ng
as t
rongbul lphase.Shor tsell
ersrevelsi
nenvironmentswher ethemar ketdecl
ineisswif
t,
deepandbr oad–l iketheglobalbearmar ketof2008-09–becaus etheystandt omake
windfal
lprofi
tsduringsuchtimes.

When s t
ockormar ket f
undament aldet
erior
atingfundamentalforas t
ockmeans l
owing
revenueorprofi
tgrowth,increas
ingchall
engestot hebusi
ness
,r i
singcoststhatareputti
ng
pressur
eonmar gins
,andsoon.Fort hebroadmar ket,wor
seni
ngf undamentalcouldmeana
seri
esofweakereconomicdatathatindi
cateapos si
blesl
owdown,orbear isht
echnicals
ignal
s

h
l
ikereachingnewhighsondecreasi
ngvolume,deteri
orati
ngmarketbr eadt
h,etc.

i n g
s
Experiencedshortseller
smaypr ef
ertowaituntilthebear
ishtr
endisconf
irmedbefor
eputting

t a
ons horttrades,ratherthandoingsoinantici
pationofadownwar dmove,Thisisbecaus
eof

a
the ri
s kthata s tockormar ketmay trend higherforweeksormont hsint he f
ace of

l
deteri
oratingfundament al
s,asi
stypi
call
ythecas einthef
inal
stagesofabull
market.

P a
n
Technicali
ndicat
orsconfi
rmt hebear i
shtrend.Shortsalesmayal s
ohaveahi gherprobabil
it
y

a
ofsuccesswhent hebearishtrendi sconfi
rmedbymul ti
pletechnicalindi
cat
ors.Thesecould

r
i
ncludeabr eakdownbelowakeyl ong-ter
ms upportlevel,abeari
shmovi ngaveragecross
over

i
l
ikethe“deat hcross
”( whichoccur swhent he50-daymovi ngaver age[MA]f al
lsbel
ow the

K
200-dayMA) ,beari
shdivergencesetc.

Theopticaltimeforshorts
ell
ingiswhent her
eisconf
luenceoft
heabovefac
tor
s.Thi
sismos
t
l
ikelyt
ooc curduri
ngt heearlystagesofabearmar ket
,whichtypi
cal
l
yhappensaft
ernew
highsi
nt hemarkethavebeenr eached.

Shor
tsel
l
ingi
nIndi
ans
tockmar
ket

I
nMar ch2001 ,thes ecuriti
esandexc hangeBoar dofIndi
a( SEBI)bannedshortsel
l
inginIndian
stockmar ket
.t hebanwasi nst
it
ut edpartlybecauseofcr ashins t
ockpricesandall
egations
thatAnandRat hi
,t het hen-pr
esidentoft heBombays t
ockExchange( BSE)usedconfidential
information acquired byBSE’ ss urvei
ll
ancedepar tmentt o makegai nsand contr
ibutet o
volatil
it
y( Rathiwasl aterabsol
vedofanywr ongdoi
ngbyt hesecurit
iesandExchangeBoardof
I
ndi a).
 Short
lyaftertheban,onl yretai
linvestorswereal l
owedt os hortsel
linthemar ket
place.In
2005,thes ecuri
ti
esand ExchangeBoar d ofIndia(SEBI)r ecommended t hati
nsti
tuti
onal
i
nvestor
ssuchasmut ualf
undsbeal lowedt oshort-sel
lsharesint hemarket,aswell
.InJuly,
2007,SEBIi s
sued shortsell
ing guideli
nes f
ori nsti
tuti
onali nvest
ors and Iearly 2008,
i
nsti
tuti
onalinvest
orswereall
owedt os t
artshortsel
li
ngs haresagain.

Mar
ginTr
adi
ng

h
Tradingonmar ginisinherentlyspecul
ati
vestrategythatcant r
ansform event hes afes
tblue

g
chipintoris
kygambl e.inthemos tbasicdefi
niti
on,tradingonmar ginisessential
lyinvesti
ng

n
withborrowedmoney.Typi cal
l
y,howi tworksisthatyourbrokeragehousebor rowsmoneyat

i
rock-bott
om ratest hen turnsaround and lend itto you atsli
ghtlyhigher( t
hrough sti
ll

s
objecti
vel
ycheap)r ates,f l
oati
ngyouf undst obuymor es t
ocks-orwhat everot hereli
gibl
e

t a
securi
ti
esyoudesire--t hanyourcashwoul dpermityout obuy.

a l a
Thef
oll
owi
ngf
ourpoi
ntss
houl
dbenot
edwi
thr
egar
dtos
hor
tsal
esi
nmar
ginaccount
s:

P
 Thes
hor
tsel
l
erdoesnotr
ecei
vei
nter
estont
hepr
oceedsofas
hor
tsal
e.

an
 Marginmai
ntenancer equi
rement–ens ur
ingt
hatthereisadequatemargint
oholdont
othe

i r
shor
tposi
ti
on–ar ebas edont hecurrentmar
ketpriceofthesecuri
ty,andnotont
hei
nit
ial

K
pri
ceatwhichthesecuri
tywass ol
dshort.

 Marginrequi
rement
scanbef
ulf
il
ledt
hroughcont
ribut
ingcas
horel
igi
bles
ecur
iti
est
othe
account
.

 I
fthes hortsel
l
eri
sunabl
etomeetthemar
ginrequirement,thebrokerdeal
erwil
lusual
lycl
ose
outthes hor
tposi
ti
onatt
heprevai
li
ngmar
ketprice,potent
iall
ysaddli
ngtheshor
tsell
erwit
ha
hugeloss.

Mar
ginMai
ntenanceRequi
rement

Each broker
age house establi
shesa mar
gin maint
enance requi
rement.Thismaintenance
requi
rementist
heper centageequitythei
nvestormustkeepinhisportfol
ioatal
lti
mes .For
example,ahous
et hatmaintainsa30% mai
ntenancerequi
rementwouldlendupto$2.33for

ever y$1.00andinvestorhaddepos it
edinhi
saccount,gi
vinghim$3.33ofassetswit
hwhichto
invest.Ani nves
torwi thonlyoneort wos t
ocksinhisportfol
iomaybes ubject
edt ohi
gher
mai ntenancerequir
ement ,typical
ly50%,becaus ethebrokerbel
ievest
hepr obabi
li
tyofnot
gettingpaidisgreaterduetot helackofdi
versi
fi
cati
on.
 TheBas
icsofTr
adi
ngonMar
gin

Whenani
nves
tors
ignsupmar
gint
radi
ngaccount
,thes
uitf
oll
ows
:

 Al
lsecur
iti
esi
nhi
saccountar
ehel
dascol
l
ater
alf
oramar
ginl
oan,i
ncl
udi
ngs
tocks,bonds,
et
c.

 Themarginmaint
enancerequi
rementvar
iesfrombrokert
obroker,sockt
ost
ockandportf
oli
o
toportf
oli
o.Thebroker
agef i
rm hastherighttochangethi
satanyt i
mesohemi ghtfi
nd

h
hi
mselfwit
hademandt oimmediatel
ypayoffhismargi
ndebtbalancewit
hnowarni
ngorface

g
havi
nghisport
fol
iol
iqui
dated.

i n
 I
fhefai
lstomeetamargi
nscallbydepos
ingaddit
ionalasset
s,hi
sbr
okermays
ellof
fsomeor

s
al
lofhi
sinves
tment
sunt
ilt
herequir
edequit
yrat
ioisrest
ored.

t a
 I
tispos s
ibl
et olosemor
emoneyt hanhei nves
tswhenusi
ngmargi
n.Hewillbelegall
y

l a
res
ponsi
bleforpayi
nganyout
standi
ngdebthemayhavetohi
sbr
okereveni
fhi
sport
foli
ois

a
compl
etel
ywi pedout
.

n P
i r a
3.FORECASTI

Aninves
torpr
i
K
NGSTOCKPRI

mari
lyrel
i
CEMOVEMENT

esonfundamentalanalysi
sofas t
ockbef
oreinvesti
n.As
pecul
ator
i
nst
eadbeli
evi
nginfundamentalanal
ysi
susuall
yr el
iesmor
eonanalys
isastock.

Te
chni
cal
vs.F
undame
ntal
vs.Ne
ws

Technicalt
raders(specul
ator
s)basethei
rtr
adingdecis
ionsonnume r
icinf
ormat i
onaboutt hepri
ceand
tr
adingv ol
umeofoneormor es ec
uri
ti
esov e
rtime.Thiscanincl
udeaddi ti
oninf
ormat i
onl i
keorde r
book/depth ofmar ket(DOM)and t i
ck/
timeand s al
e stapeinf
ormation abouti ndivi
dualtrade
execut
ions.Mos ttechnic
altr
ade r
susevari
oust y
pesofc har
ti
ngandmat he mati
calorv i
suali
ndicators
tomak eaddi t
ionalsenseofthisinf
ormati
on.Quantit
ative“quant
”t r
adersar eas ubsetoftechnical
tr
ade r
swhoputmor eemphasisonsophi
sti
catedmathematic
stoanal
y s
isdata.
Fundame ntal
str
aders(
inves
tors
)basethei
rtradesoneconomici
nformat
ion,usual
l
ybett
ingthatove
r
thelongr uncert
ainrel
ati
onshi
pwi l
lhol
d.The yfre
quent
lypayli
ttl
einf
ormati
ont ocharts
tudie
sor
previ
ouspr i
ceandputmoreemphas i
sondete
rminingwhatthepr
iceofasecur
it
youghttobebasedon
thetotal
i
tyofinf
ormati
onaboutit.

Newst r
adersareavariantonfundamental
strader
s.Theyspeci
ali
zeIt heeff
ectt
hatnewswil
l
haveonas ecur
ity’
spriceeit
herbytryi
ngtoreactveryqui
ckl
ytobr eakingnews,orbytr
ying
topredi
ctthenewsits
elfandwhatitsimpactwil
lbe.

Fundament
alAnal
ysi
sVs
.Techni
cal
Anal
ysi
s

g h
n
Fundament
alanal
ysisisa met hod ofeval
uati
ng secur
iti
esbyattempt
ing t
o meas ur
ethe

i
i
ntri
nsi
cval
ueofastock.Fundamentalanal
ysi
sstudyeveryt
hingf
romtheover
alleconomyand

s
i
ndustr
ycondi
ti
onstothefinanci
alcondi
ti
onandmanagementofcompanies

t a
Technicalanalysi
sist
heevaluati
onofs ecuri
ti
esbymeansofs tudyi
ngs t
ati
sti
csgenerat
edby

l a
mar ketact
ivi
ty,suchaspastpri
cesandvol ume.Techni
calanal
ystsdonotattempttomeasur
e

a
as ecuri
ty’
sintri
nsi
cvaluebuti
nsteaduses ockchart
stoident
if
ypat t
ernsandtrendst
hatmay

P
suggestwhatas tockwil
ldointhefut
ure.

n
I
nt hewor l
dofs tockanalysis,fundament alandtechnicalanalysi
sareoncompl etelyoppos i
te

a
si
desoft hes pectrum.Earnings,expens es,asset
sandl i
abi l
it
iesareall
importantc haract
eristi
cs

i r
tofundament alanalyst
s,wher east echnicalanal
ystscoul dnotcarelessaboutt hesenumber s
.
whichs trategywor ksbesti salwaysdebat ed,andmanyvol umesoft extbookshavebeen

K
writt
enonbot hofthesemet hods .Speculatorsalwaysr elyonthetechnicalanalysishencear e
call
edchar tistandbel i
evesi nt heconceptof“Hi storyRepeat sit
self
”i nthes tockmar ket.A
speculat
orwhot akestechnicalanal ysi
sintocons i
derationthehistor
icalpatter
nsoft hes tock
pri
cemovement s

TheTechni
cal
Anal
ysi
shas3bas
icPr
inci
ples
:
Themarketconsi
der
severyt
hing.Thefactorsaf
fect
ingthemar
ketar
eal
readyr
efl
ect
edi
nthe
pri
ceanddetermi
nethebehaviorofmarketpart
ici
pants
.

Thepricemovesinacert
aindirect
ion.Anypr i
cechangeshaveoneoft het
hreet
rends
.The
tr
endscangoup,down,ort heremaybes i
dewaystrends.Theaim oft
hest
ockst
raderist
o
i
denti
fythet
rendsini
tsi
nfancyandkeeptradingunti
lther
eversal
.

Themar kethasagoodmemory,orhi
stor
yrepeat
sit
self
.Thepatt
ernsofpasts
ituat
ionsf
inds
i
tsref
lecti
oninthepr
esent
.Thel
awsaff
ecti
ngthemarketremai
nunchanged.
Otherf
act
orsthatl
eadaninves
torandas
pecul
atort
ofor
ecas
tst
ock
pr
icemovementeit
herway:

Economi
cGr
owt
h

1
.Int
eres
tRat
es

Ther eserveBankofI ndiacanr ais

eorl owerinter
estratestostabili
zeorst
imul
atetheI
ndian
economy.Thi sisknownasmonet arypoli
cy.I facompanybor rowsmoneyt oexpandand
improvei tsbusiness
,higheri nter
estrateswi l
laff
ectt hecostofi tsdebt
.Thiscanreduce
companypr ofi
tsandt hedividendsitpayssharehol
ders.Asar esult
,itss
harepr
icemaydrop.

h
And,i ntimesofhigherinterestrat
es,i
nvestmentthatpai nt
eresttendtobemoreattr
act
iveto

g
inves
tor sthanstocks
.

si n
2.Economi
cout
look

t a
I
fitlooksli
ket heeconomyi sgoingtoexpand,s
tockpri
cesmayr i
se.I
nves
tor
smaybuymore

a
st
ockst hi
nkingtheywi l
lseefutureprof
it
sandhigherstockpr
ices
.Ift
heeconomi
cout
looki
s

l
uncert
ain,invest
orsmayr educethei
rbuyingors
tarts
ell
ing.

a
3.I
nfl
ati
on

n P
I
nfl
ationsmeanhi gherconsumerprices
.Thisoft
enslowss al
esandr educesprof
it
s.Higherpri
ce

a
wil
lalsooftenleadt ohigherint
erestrates
.Forexampl e,ther es
ervebankofI ndiamayr is
e

r
i
nterestratestos l
ow downi nfl
ati
on. Thesechangeswi l
ltendt obringdowns t
ockprices.

i
Commodi ti
eshowever ,maydobet t
erwi t
hinfl
ati
on,sotheirpricemayr i
se.

K
4.Def
lat
ion
Fall
ingpricestendt omeanl owerpr ofit
sf orcompani
esanddecr easedeconomicact
ivity.
Stockpricemaygodown,andi nvestorsmays tar
tsell
ingtheirsharesandmovedt ofixed
i
ncomei nvestmentli
kebonds .I
nterestratesmaybel oweredtoencour agepeopl
etoborrow
more.Thegoali sspendi
ngandeconomi cact i
vit
y.t
hegr eatdepres
sion(1929-1
939)wasone
ofthewor s
tperiodsofdef
lat
ionever .

5.Economi
candpol
it
ical
shocks

Changesaroundt
hewor l
dcanaf f
ectboththeeconomyands tockprices.Forexampl
e,ari
sein
ener
gycostscanleadtolowersales
,lowerprof
itsandlowerstockpr i
ces.Anactofterr
oris
m
canals
oleadtodownturnineconomicacti
vit
yandf al
li
nstockprices
.

6.Changesi
neconomi
cpol
icy

I
fanew governmentcomesi
ntopower,i
tmaydeci
detomakenew pol
ici
es.Somet
imesthes
e
changescanbeseenasgoodforbusi
nes
s,andsomet
imesnot
.Theymayl eadtochangesi
n
 i
nfl
ati
onandi
nter
estr
ateswhi
chi
ntur
nmayaf
fects
tockpr
ices
.

7.Theval
ueoft
heI
ndi
ancur
rency
ManyI ndiancompani essel
lproductst obuyersinot
hercountries
.IftheIndi
anr upeeris
es,
thei
rcustomerswillhavetospendmor et obuyIndi
angoods.Thiscandrivedownsal es
,which
inturncanl eadtol owerstockprices.Whent hepri
ceoft heIndianrupeefal
ls
,i tmakesit
cheaperforother
st obuyourproduc t
s.Thiscanmakestockpri
cesrais
e.

Cor
por
ateFi
nanci
alRes
ult
s

h
Financials
tat
ement scanhavecanhaveadr asti
ceffectonthestockpriceofacompany.Many

g
investorsl
ookatt hef inancialstatementwhenmaki nginvest
mentdeci sion.Ifi
nformationi s

i n
presentedinfinancialstatementt hatisbetterorwor sethanexpected,itcans endt hes t
ock

s
priceupordown.I nves t
orsoftenus efinancialrati
osbas edoninformationfrom thefinancial

a
statementstomakeas sumpt i
ons .Becauseoft his,t
hef i
nanci
alstatement scanhaveadr astic

t
effectontheinvest
or sofabus iness.

a l a
P
Divi
dend announcements
:Di vi
dendsactasa s ignal
ing devicefors har
epr i
cemovement .
Divi
dedannouncement sinf
luenceshareprices.Ifcompaniesannouncedi vi
dend,general
ly

n
sharepri
cesofthosecompaniestendtoincrease.Animpor tantpointtonoteisiftherat
eof

a
divi
dendannouncedisles
sthanwhatwasexpect ed byinvestors,s
harepr i
ceswoul
ddec l
ine,

i r
whereasift
heyareupt oaremor ethanexpectati
ons,sharepr i
cesi
ncrease.

K
Cor
por
ateI
nfor
mat
ionandAnnouncement

 Newsr
eleas
esonear
ningsandpr
ofi
tsandf
utur
ees
timat
edear
nings

 Announcementofdi
vidends

 I
ntr
oduct
ionofanewpr
oductorapr
oductr
ecal
l

 Secur
inganewl
argecont
ract

 Empl
oyeel
ayof
fs

 Ant
ici
pat
edt
akeoverormer
ger

 Achangeofmanagement

 Acc
ount
inger
ror
sors
candal
s
I
nadequat
esi
zeoff
reef
loatbl
uechi
pst
ocks

Adecl
ineinfree-fl
oat(sharest
hatarer
eadil
yavai l
ablef
ortr
adeinthemar
ket)wi
llnotonl
y
makeitt
ougherf orins
tit
uti
onstogetabigchuckoftheequi
tyshar
einacompanyatonego,
butal
sotakesthevaluati
onsup,maki
ngthestockexpensi
ve.

h
Forinst
it
utionalinvest
ors
,whi l
et heiss
ueis–wher etoi
nvestthelargeinfl
owsreceivedfort
he

g
retai
linvestors
,who ar e generall
y crowed outby inst
ituti
onali nves
torsand company
promoters,expertssayaccumulat i
onofbluechipsandgoodqual i
tymi d-capstocksisakey.

i n
Thisisbecauseasandwhenl argeinfl
owsf ol
low t
hepi
ck-upi nIndianeconomy,mos toft
he

s
moneybys hort
ingthosestocksi
nt hemar ket.

a t a
l
Li
qui
dit
y

P a
I
nt hemar ket,li
qui
dityhasas l
ight l
ydiff
erentmeani ng,althoughs ti
llti
edt ohoweas il
yas sets
,

n
inthiscas es haresofstocksofst ock,canconver tedtocas h.Themar ketforas tocki ssaidtobe

r a
l
iquidi fthes harescanber apidl ysoldandt heactofs ell
inghasl itt
leimpactont hes t
ock’s

i
price.Gener all
y,thistransl
atest owher et hes haresaret radedandt helevelofi nterestthat

K
invest orshavei nthecompany.Companys tockt r
adedont hemaj orexchangescanus uall
ybe
cons ideredl i
quid.Of t
en,appr oxi matel
y1 % oft hefl
oatt radeshandsdai l
y,indicat i
ngahi gh
degr eeofi nteresti
nt hes t
ock.Ont heotherhand,companys tocktr
adedont hepi nks heetsor
overt hecount erareoftennon-l iquid,wit
hver yfew,evenzer o,sharestradeddaily.

Anot herwaytojudgeliqui
dit
yi nacompany’ sstockist
olookatt
hebid/as
ks pr
ead.Forl
iqui
d
stocks,suchasMicrosoftorgeneralelect
ric,thes pr
eadisof
tenj
ustafew pennies
-muchles
s
than1 % oftheprice.Forill
iquidstocks,thes preadcanbemuchl arger
.Amount ingafew
percentofthetr
adingpr i
ce.

Mer
ger&Acqui
si
ti
ons

St
ockpr
icescanchangesevenaf
tert
hemer
geri
sannounced
A common ques ti
on rel
ati
ve t
o M&A act i
vit
y and itseff
ecton stockpricesiswhy t he
acquis
iti
ontargetstockpri
cedoesnotequalt hevaluetheacqui
rerwi l
lbepaying.I
not her
words–i facompanyAi sbuyingcompanyB’ sstockfor$10as har
ei safew months.why
doesn’tcompanyB’s t
ockequal$1
0immediatel
yfol
lowingtheannouncement?
Uncer
tai
ntycanl
owerpr
ices

Thediff
erent
ialbet
weenanM&At ar
get’
sac qui
si
ti
onpricepershareanditscurr
entt
radi
ng
pri
ceaccountsfortheuncer
tai
ntyar
oundt hemerger
.Ifepurchaseneveractual
l
yhappens,
thetar
get’ss
tockwill
li
kel
ydropsi
gni
fi
cantl
y.

Hos
til
etakeover
sar
eEvenMor
eUncer
tai
n
Themor euncert
aint
heactualmer
geris,hewiderthisdelt
aordi f
ferent
ial
willbe,f
orexample

h
,ifthetargetcompany i
sbeingsubj
ectedtoahos til
eoruns oli
cit
edtakeoverthedi
ff
erence

g
betweentheacquisi
ti
onstockpri
cewi l
lbeverywi deasmanagementwor kstofendoffthe

i n
acquir
erorattr
acta‘whit
eknight
’torescuei
tfromt helargerfi
rm.

s
Somet
imest
heAcqui
si
ti
onTar
get
’ss
tockwi
ll
ris
eAboveTakeoverOf
fer

t a
Thiscanhappenwhent r
ader
sbelievethattherei
sli
kel
ytobeanot herbidderthatwi
llof
fer

l a
morefort
hefirm.Thi
sisamoreunusualsi
tuati
onbuti
twill
happenfromtimet ot
imewhenthe

a
dealwoul
dgivethewinni
ngbi
dderas igni
fi
cantcompet
it
iveadvant
age.

P
I
nsi
dert
radi
ng/
pri
cer
iggi
ng

n
Thebas icintui
ti
ont otr
adi
ngbyi nsi
dersand others pecul
atorswithpri
vateinformation

a
concerni
ng thevalueofa parti
cularcorporat
ion.Int hepr esenceofinf
ormed trading ,

i r
outsi
derswhol ackthei
nfor
mati
onwi l
lfi
ndthei
r pur chasessubjectt
oadvers
es el
ecti
on;at

K
anygivenpr i
ce,sharearemor
el i
kelytobeavailabl
et otheoutsiderwhen,unbeknowns tto
them ,theeconomicval
ueofcorporati
onislow t
hanwheni tishigh.Thisi
sbecauseinsider
trader
saremor e

I
nfor
mat
ionas
ymmet
ry/Mar
ketr
umor
s
Af law inmar ketsthatreceivesagr eatdealofat tentionIdi scussi
onsoft hecur r
entfi
nancial
crisi
si si
nfor mat i
ont r
anspar ency.Tr ansparencyi sacent ralpr oblem,andt heavailabi
li
tyof
timelyandr elevantinfor
mat ioni sseenascr it
icalfactortoachi evingefficientoutcomes,si
nce
l
ackoft ranspar encymakesi tdiffi
culttoevaluater i
skandachi eveeffi
cientout comes.“After
all,thefundament alri
sk/rewar dcor ol
larydependsont heavai l
abili
tyofi nfor
mat i
oniscentral
tot heoper ationofef f
ici
entmar kets,butlef
tt oitsowndevi cest hemar ketwi l
lunderproduce
informationbecaus eitisapubl icgood.As ymmet r
ici nf
ormat ionwr eakshavocwi thmar ket
functioni
ng.

Therefore,accor dingt oefficientmarkettheoryassetpiecebubbl esarepr eventedbyinvest

or ’
s
appetitetobuyas setsont hecheapands el
lthem whent ooexpens ive.itfoll
owsthatanas set
overpriced,i mpl yingt hatas s
etbubbler equi
reinvestorstobehavei r
rati
onally.Thisli
neof
reasoningleadst ot hei rr
at i
onalinvest
ordef i
nesoft heeffi
ci entmar ket .i tfol
l
owst hatan
assetoverpriced,i mpl yingt hatassetbubblerequireinvest
or stobehavei r
rati
onall
y.Thisline
ofreasoningl eadst ot heirrational
invest
ordef i
nesoft heef
ficientmar ket
Burieddeepwi t
hindeept heEf f
ici
entMar ketHypothes
isistheuns tatedass
umpt i
ont hat
i
nves t
orsalwayshavet ohandt heneces s
aryinf
ormati
onwi t
hwhi chtocalcul
atethec orrect
pri
c eofanas set
.Ifthi
sas s
umptiont ur
nsouttobef al
seandinvestorsaresometi
mesdeni ed
thenecessaryinf
ormationtomakei nfor
medjudgmentsaboutassetpri
ces,orworsesti
lli
fthey
aregivenmi sl
eadinginformati
on,t henitbecomespossi
bleforas s
etpricebubblestof or m
withouti
nvestorsbehavingir
rat
ionally.

Mas
siveI
nves
tmentt
hroughFI
I
s&DI
Ivi
cever
sa

g h
FI
I
sEFFECTONSTOCKMARKETS

i n
Whi l
eanalysi
sas t
ock,t heper centageoffi
llholdi
ngisanimport
antfact
ort obenoted.When

s
% hol
dingsofFLLsincreaseinas t
oc ki
tsst
ockpr i
cegoesupandwheni tdrops,i
tss
har epri
ce

a
comesdown.However ,investorsshouldnott akethatasanegat
iver
emar k.IfanFI
Iinvest
sin

t
acompany,i tal
someanst hattheys eegrowthpotential
int
hatcompany.

l a
I
fthenumberi
st oolar
getheni
t’seas
ierf
ort
hei ndivi
dualent
it
lestomoveoutofast
ockwhi
ch

a
wouldmakestockpr i
ceofthecompanyveryvol ati
leandrisky.Soinves
tingi
nacompany

P
whichhass
mallernumberofFI
I
scouldbeasaferinvest
mentopt i
on.

n
Af undamentall
ys oundcompanywhichhasaconsi
stentandst
ableFI
Ishareholdi
ngwouldbe

r a
ani dealcandi
datef ori
nves
tment.WhensomeFIIsexitf
rom agoodstock,it
spr i
ceact
uall
y

i
fal
lst husgivi
ng a good chancetoinvesti
ni t
.However ,ifi
tisduet o changeinthe

K
fundamentalsofthecompany,iti
sanegati
vesi
gn.

Economi
cBubbl
esandI
rrat
ional
Exuber
ance
Whenr idi
ngatrendandfoll
owingindustr
yinvest
ments
,it
’si
mport
anttobever
yofeconomic
bubbles
.Aneconomicbubbleisgeneral
l
ydefinedasaperi
odofhi
ghtradi
ngvol
umesofst
ocks
thatareabovet hei
rint
rinsi
cvalues.Volati
li
tyoccur
swhenabubbl epopsofpricesare
corr
ected.

From 1 995t o2000,t heU. Seconomyencount eredthedot -com bubble,whichmar kedt he

beginningoft heinterestasacommer ci
al f or
ceandt heformat i
onof,manyi nter
est-based
compani es(referr
edt oasdot–coms ).Speculat
ionindot-comsl edtoahi ghi
nfluxofc api
tal
,
andi nves t
orswer ewi l
lingtooverl
ookt r
aditi
onalanal
ysismetricsbef
oreinves
ting.Amaj ori
ty
ofdot -comss penttheirvent
urecapit
alwi t
houtrecei
vinganyr etur
ns,andanumberofmar ket
forcess ubsequentlyledt oabearmarketwhent hedot-combubbl eburst
.

Scams&I
rregul
ari
ti
es
Not
hingget
stheatt
enti
onoftheIndi
amediaqui
ckerthanagood–ol
dfashi
onedscandal
.
I
nsi
dertr
adi
ng,fr
aud,cooki
ngthebooksandot
herhigh-end,whi
tecol
l
arscamshaveall
 coll
aps ed popul
arcompani esand negat ivel
yi mpact ed the mar ket
si nt he recentpas t
.
Hous eholdnames,suchasKetanPar ekhandHar shadMeht a,caus
edpl ummetingstockprices
andcr eatedadomi noeff
ectwithassociat
edbus i
ness esandf i
rms.Cheat i
nginvest
or si
sil
legal
andl eadst ojai
lti
me,wor thl
essstockpricesandl ar ge-scalecorporatelayoff
s,whi c
hcan
aff
ectt hemarketandhurtevent hos
ewhower enoti nvol vedinthescandal .

Eff
ecti
veregul
ation:ift
hemar keti
sr uni natransparentmannerwi t
heffect
iveregulati
onhen
theinves
torswoul dfeelconf
identtoi nvest
.Ther efor
e,mor ebuyingwoul dtakepl aceand
sharepri
cesincrease.Butwhenr egulationi
si nef
fecti
veandi fscamsoccur(HarshadMeht a
scam,MSs hoess cam ,CRBs cam ,Ket anParekhs cam andt herecentIPO s
cam )i nves
tor
s
wouldlos
econfidence.Theywoul dpanicands ellthei
rshares
.Sopr i
ceswouldfall.

I
nves
tmentCl
imat
e

g h
Confidencepl aysamaj orr ol
einstocktrading.Invest
orswhobel ieveinthemarketaremor e

n
l
ikel
yt opurchas estocks
,takemor eris
ksanddr iveupt hepri
ceofs tocks
;whenthisconfi
dence

si
f
ails
,t hemar ketfall
.Anexampl eoftheef f
ectsofinvestorconf
idenc ecanbeseeninthe2008

a
10financialcr i
si
s.Wheni nvest
mentf i
rmsbegant ocoll
apse,investor
slostconfi
denceand

t
ref
usedt otaker is
kandf undinvest
ment s
.

l a
Pol
it
ical
Iss
uesandGover
nmentSt
abi
li
tyVi
ceVer
sa

a
Alongwi thwor l
devents,i
nternalpoli
ti
caleventsal
sohaveeffect
sont heI
ndianstockmarket.

P
Foll
owi ngtheModigover nment ,themar ket
sr os
easmor alewashi ghand Indianswere

n
confidenttoinvest
.Thes t
ockmar ketisundoubtedl
yaff
ectedbyt henati
onalel
ectioncycl
eas

a
well.Thereiss omeevidencetos uggestthatwithastrongGover nmentandaRepubl i
cati
on

i r
st
ate,t hest
ockmar keti
smor erobustwell
.

K
Pol
iti
cs,i
nt er
msofactualori
mpl i
edgovernments upport,canal
soaff
ectst
ocks.Thestock
marketwor kswithi
nal egalframework.When t hisframewor
k change asa resul
tof
governmentregul
ati
onorderegulati
on,volat
il
it
yoc cur
.Forexample,alargepartoft he
mortgagecris
isof20087wascaus edbyaquas i
-governmentinst
it
uti
oncalledthef
ederal
Nati
onalMor t
gage

As
sociat
ion(mor
ecommonlyr
efer
redt
oasFanni
eMae)
,whi
chpl
ayedal
arger
olei
nis
sui
ng
mort
gagestohomeowner
s.

FACT:

 I
ndia’
sstockmarketsur
gedon16May2014aft
erearl
yelect
ionres
ult
ssugges
tedas
weepi
ng
vi
ctor
yforNarendraModiandt
hepr
o-bus
ines
sBharati
yaJanataPart
y.

 I
nvest
orsreact
edtot henewswit
henthusi
asm,andMumbai ’
sSens exi
ndexadvancedbymore
t
han5% i nearl
ytradingbef
orepar
inggainstoclose0.4higher
.Ther upees
trengt
henedby
morethan1% andhitanew10-mont
hhi ghagai
nstthedol
lar
.

 Thepros
pectofModi-l
edgovernmenthel
pedboostI
ndi
anstockbyalmos
t13% si
ncet
hest
art
of201
4.Therupeeal
sores
pondedbyclawingi
tswaybackf
romadi s
malperf
ormancei
n201
3.
LawandOr
derSi
tuat
ion

Nat urall
y,fearcanchangei nves
tmenthabits.After9/11
,peopl
ecas hedoutt hei
rinvestment
s
andval uespl ummeted.Panickeds el
l
ingstoppedaf t
eraf ewdays,butittookaboutt woyears
fort hemar kettofull
yr ecoverfrom theterror
istatt
acksandt hewari nIraq.However ,war
turnedoutt obethesolutioninthecas eofthe1930sandt heGreatDepressi
on.Ani ncr
easein
mili
t aryspendingincreaseddemand.A t errori
stattack(Pear
lHar bour),thens purredthe
nationi nt
of i
nanci
alrecoverydur i
ngwor l
dwarI I.

g h
Weat
herandMons
oon

si n
Everyoneemphasi
zestheimpactofmonsoonont heIndi
aneconomyandgi venourhigh

a
dependenceonmonsoonrai
ns,theagr
icul
tur
alsect
oristhemostvulner
abletothechangi
ng

t
dependencerai
npatter
ns.Butther
eisnegat i
vecorr
elati
onbetweent hetwo.Asperand

l a
art
iclei
s

a
bus
inesss
tandar
d,i
nt hel
astonedecade,t
hereishardl
yenoughcorrel
ationt
os ugges
tthat

P
monsooncanhavemuchbeari
ngonthemarketsent
iment
s.i
nfact,asperthedata,theBSE-

n
Sens
exret
urnswer
et hehi
ghesti
ntheyearwhenr ai
nfal
lwasmostdefi
cientwi
thr
egar
dst
o

r a
l
ongper
iodaver
age(LPA),However
,iti
spar
tpsychol
ogical
andpartact
ual .

K i
Mons oonseemstobet heonlyrespi
tethatIndiancompani escanl ookf orwardt ot hi
syear
(2016),aft
ertwoconti
nuousbadmons oonyear s.Fall
ingr upee,highf i
scaldeficit
,f l
ightof
foreignfundsandpoorearni
ngs,thes
ehavebeent heonlythemesi nt heIndiastoryformany
quar tersnow.However ,a good monsoon mi ghtbring good tidings,atl eas tfors ome
compani es.Goodmonsoonimprovestheruraldemandf orproduct,increasingthepur chas i
ng
powerandcompani essuchasHUL,Dabur ,Godrejcons
umer ,andITCbenef i
talot.

Demandoftwowheel
ers
,low costcars,andtract
orsal
soi
ncreas
esduri
ngagoodmons oon.
Whichi
shel
pful
forM&M,Escort
s,Eicher,Mar
utiandBaj
ajAut
o.Highf
armproduct
ional
so

Lower sraw mat eri

alcost
sforcompani esthatmakepackagedf oods,forins
tance,Br it
annia,
GSKcons umer,ITCandNes tle.Datas howsacl oseli
nkbetweenr ainsandfortunesofFMCG
compani es.Fert
ili
zerandirr
igationcompani essuchasChambal. RCF,Jainir
r i
gation,etc.get
adirectboos tduet obett
err ainf
all
.Oncet herainssupportbett
eragr i
cul
turalout put,the
windfall
gai nsarewitnes
sedaut omati
cal l
yinthemanufacturi
ngands ervi
cessectoraswel l
.
 FACT:

 Thes tudydonebyHar di
kVachhraj
ani,Dr.JayDesaiandKinj
alJayDes aies
tabl
is
hesa
signif
icantrelati
ons
hipbetweenr
ainf
allandperf
ormanceofI
ndi
anequit
ies
.Theyfoundthat
thepos t-monsoonperi
odshavegenerat
edalmostdoubl
etheret
urnthanthepre-monsoon
periods

 Despi
tet
hemoder
ater
ainf
all
,ther
ewaahugedr
opi
n2008duemai
nlyt
ogl
obaleconomi
c
cr
isi
s.

 Thepos i
ti
vemovementof2009wasnotatal
lrel
atedt
omons
oonr
athert
other
ecover
y
i
nit
iat
ivesfr
omthel
astf
all
.

g h
 I
n20014,I
ndi
aexper
iencedweakmonsoonandheavydr
oughti
nmostpart
softhenat
ion.s
til
l
,

n
t
hestockmar
ket
swer enotmuchaf
fect
ed,evi
dentl
yduetot
heModient
huasi
asm.

si
t a
Budgetexpect
ati
onsandI
mpact

a l a
Thes t
ock,mar ketofacountr
yi ssai
dt oactasabar ometerofit
seconomichealt
h.All

P
economicacti
viti
eshappeni
nginthecountr
yandout si
dethecountryleadtochangeint
he
marketcondit
ions.Dif
fer
entmar

n
ketpl
ayerswhoinvesttheirmoneyins t
ocksarenotonl
y

a
int
eres
tedtoknow aboutt her
iseandfalli
nthemar ket;theyarekeentoknow aboutt
he

r
vari
ouseconomic

K i
events
/acti
vit
iest
hataregoingtotakeplacei
nt henearfuture.Thestockmarketreact
s
dependingonhow thei
nves
torsi
nter
prett
heeconomicact
ivi
ti
esTheunionBudgetisper
haps
the

mostwatched eventin economicpol

icymaki
ng inIndia.Thecor efi
scalis
sues
-tax
ati
on,
ex
pendi
tures,andfi
scal
defici
t-ar
eobvi
ousl
yimpor
tantformacroeconomi
cs.Inaddi
ti
on,

government shaveof t
enchos ent ous ethebudgets peechasamechani smf orannouncing
importantnew pol i
cyi ni
ti
ati
ves,andf oroutl
inings omepl ansforeconomicpolicyint he
comingmont hs.Thes tockmarketr esponsetoabudgeti softenviewedasani mpor t
ant
summar ys tat
ist
icoft he‘quali
ty’ofaBudgeti nt ermsofi mprovingthemacr oeconomic
prospects
.Int hi
sr esearchpaper,Iintendedtofindani nterpl
aybet weentheBudgetandt he
stockmar ket,int hear easli
kei nf
ormat i
onaleffici
encyandi mplicat
ionsforportf
oli
osand
tradi
ng.Int hisstudy,t hemainfocusi sonr et
urnandvol ati
li
tyimpactalongwithdi f
fer
ent
eventwindows .
 FACT:

 WhenJai
tl
eytookhi
sseataf
terf
ini
shi
nghi
sspeech,t
heSens
exwasmor
ethan300poi
ntsup
andt
heNif
tywasuptoby80

 Therupeetoohadaddedofpos
iti
vit
ytoBudget201
7day+,appr
eci
ati
ng24pai
sa,t
oRs67.
63
tot
hedollar.

 The30-stoc
kBSEbenchmar
kSens
exhadl
ost226poi
ntsi
nthet
wot
radi
ngdaysbef
oret
he
budgets
peech.

 Thepos
iti
veperf
ormanceofbothkeyi
ndi
ceswasr
efl
ect
edacr
osst
hebr
eadt
hoft
hemar
ket
,in

h
thes
mallcapandmidcapi
ndiceswaswel
l
.

n g
 Goldpri
cesf
ellonWednes
dayMor
ning,wi
thf
utur
escont
ract
ingbyRs87,t
oRs28,
705per1
0

i
grams.

t a s
a
Noi
symar
kethypot
hes
ist
hatf
ormsbas
isf
orcr
eat
ionofdemandands
uppl
y

a l
Thisageol deconomi cmodel i
sexpl
ainedinthewor l
dofstocks.Whent hepriceofstocksisl
ow

P
(orsupplyi shigh),inves
torwi l
lbuymor ecreati
ngademandf orthatstock.Aft
erawhi l
e,the
pric
er i
ses( orsupplydecr eases
)asi nves
torshaveprovent heyar ewi l
li
ngt opayahi gher

n
amountf ors uccessf
ulstocks.Whent hepriceistoohi
gh,howeverdemanddecr easesand

a
i
nves torsmoveon.Somet i
mest her
ei sas weetspotwhens upplyanddemandar ebalanced,

i r
buti nevitablyt hebat t
lewageson and s upplyand demand f l
uctuatesast heyhavef or

K
thousandsofyear s.
4.SPECULATI
ONI
NSTOCKEXCHANGE

4.
1Pr
osandCons

Speculat
iveact
ivi
ti
escontri
but
et oturnoverandvol umeofbus i
nessinstockexchange:
The
otherbigcontr
ibut
iontovolumescomesf rom speculat
ors,whot akeas li
ghtl
ylonger-t
erm
view ofthei
rst
ocks.Si
ncethespeculat
orisonlyinterest
edi ntaki
ngabetont hestockand
profi
ti
ngf r
om i
tspri
ceswings-withoutactual
l
yt akingorgi vi
ngdeli
veryoftheshares–thi
s
'l
ongerterm'canbeanythingfrom adayupt ot hedurationofas ett
lementperi
odont he
exchange

h
I
nor dertomaket heirnetsett
lementobli
gati
onzer oattheendofanexchange'str
adingcycl e,

g
specul
atorssquareofftheirt
radesbybuyingandt hensell
ing(orvi
ceversa)wi
thi
nthatperiod.

i n
Approximatel
yRs3, 000crorei st
radedbetweentheBombaySt ockExchangeandtheNational

s
StockExchangeever yday.I nvestor
sbuyingforthemedi um tolongterm,orsel
li
ngex i
sting

a
holdi
ngscont r
ibuteas urpri
singl
ys mal
lporti
onoft hi
s.Al most85percentiscontr
ibut
edby

t
specul
ators.

l a
Volumesmai nlytel
laboutt hespeculati
venat
ureofstocks
.Apar tf
rom beingconcentr
atedin

a
thehandsofmar ketpr of
essi
onal
s,volumesals
otendt obeconcentratedwi t
hinahandfulof

P
stocks.OfthetotalturnoverontheBSEandt heNSE,over60percenti sconcent
ratedinj
ust

n
10s t
ocks.Clearl
y,volumest el
lverylit
tl
eaboutastock'sfundamental
s,whichwi l
lult
imat
ely

a
determinemedium-t olong-termreturns

K i r
Li
qui
dit
yhel
psdi
scover
ingbet
terpr
icei
nst
ocks
Thereis,however,asil
verli
ning.Heavi lytr
adeds t
ocksareveryl i
quid,andther
efor
e,easi
ly
avail
abl
e.Thes pread(t
hediff
erencebet weenthepr i
cesatwhichas tocki
sboughtorsol
data
pointi
nt i
me)islow,andsotoowi llbet hetr
ansacti
oncostsi
nvolvedinbuyingorsel
li
ngthem.
So,theretur
nsont hes
es t
ocksarehi ghertothatext
ent

Althought hiscouldbet heonlyadvant agehighvolumesgivemedi um-t olong-ter

mi nves
tors,
i
ts til
ldoesn'tmeani t'
sunwi s
et oinvestinheavil
ytradedstocks.Butbeforeyoudo,it'scr
ucial
tobeabs ol
utelyclearaboutwhatki ndofs tockstheyar e,ast hefoll
owi ngexampleswi l
l
i
ndi cate.Int
elli
gentInvestorlookedatt heNSEdat abetweenNovember1 995andDec ember
1998f orthe1 0mos theavil
ytradeds tocksi
neachmont hsi
ncet hiswouldel i
minat
elowpr i
ced
stockst hatmightoccasionall
yhavemadei t.
5.
CASESTUDY

5.
1.The1
0mos
tact
ivel
ytr
aded(
highl
iqui
d)s
tocks
:

5bluechi
pst
ocksmus
thavecommonr
epr
esent
ati
onbot
hinBSESENSEXandNSENI
FTY50
ar
e:
a.HDFC

h
b.SunPhar
ma

n g
c. Coal
Indi
a

si
d.Tat
aMot
ors

t a
e. Bhar
tiAi
rtel

l a
5mor
est
ocksf
romt
heot
heri
ndex

a
a.Rel
ianceI
nfr
a

P
b.Pet
ronetLNG

an
c. Br
itanni
a

i r
d.JVLAgr
oindus
tri
es

K
e. Munal
iPet
rochemi
cal
s

5.
2.Over
all
Mar
ketAnal
ysi
s

TheIndi
anmarkethashadaheal
thyyear
,ret
urni
ngover25per
centbet
weenSens
exandt
he
Nif
tyonayeartodatebas
is.

Theyearalsosaw theindicescl
ocki
ngf r
eshmil
est
ones,astheNif
tyreached10,
000-mar
ki n
themonthofJuly.Despi
teaf ewconsol
idati
onphas
es,thei
ndexhaslar
gelytr
adedabovethat
mark,whil
etheSensexalsot r
adedabove33800marks.

Amongs everalaspect
swhichaffectedthemar
ketsthi
syearwereGST,I
BCandbankrecap
progr
amme,I PO fr
enzy,ratehikesbyt heUS Feder
alReser
veal
ongwi t
hDonal
d Tr
ump
becomingthenewPr esi
dentofUnitedSt
ates
.

Wel
is
tat1
0maj
ort
hingst
hats
hapedt
hemar
ket
sdur
ingt
hisper
iod.
PSUbanks
Financesectorwasoneoft hebignewsmakersofthi
syearasmul ti
pleref
ormswer erol
ledout
tofixtheiss
ueofr i
singNPAsalongwithaddresst
heircashfl
ow needs.Amas siveRs2. 11lakh
crorerecapi
tali
zati
onpl anf
orpubli
csect
orbankswasl ai
doutbyt hegover nmenti nOct ober
2017.Thepl anisspr eadovertwoyears.TheCentrewilli
nfuseRs1 .35lakhcr orethrough
recapit
ali
zationbondsandRs76,000cror
ethroughbudgetar
ys upportandmar ketris
ing.

Thegover nmentalso br
oughti n an amendmentt otheInsol
vencyand Bankr upt
cyCode
ordinancei nNovember2017withanaimt opreventmis
useofthefaci
li
ty.Thechangeprevent
s
wilf
uldef ault
ersorpromoterswithsomehi s
toryofdefaul
ter
sfrom biddingforthei
rownor
otherstressedasset
satadiscount
.

g h
AyearofI
POs

si n
Theyear2017coul
dwel lbecall
edtheyearofIPOs(ini
tialpubli
coff
eri
ngs)
.Accordingtoa

t a
l
atestMotil
alOswalrepor
t,over120companieshi
tthepr imarymarketandhaver ais
edRs

a
70,000cr
oresofar,muchhigherthanRs42,500cror
er aisedinFY08andt hatofRs29,1
00

l
crorei
nFY17.

P a
TheyearalsosawoneofthemostsoughtafterI
POwitnes
singabumperl
is
tingpr
emiumof100

n
percent
. 
AvenueSuper
marts,t
heoperatorofD-Mar
t,doubledi
nves
tor
s’wealt
hintheopeni
ng

a
ti
ckandhass eenanupwardmovesince.

i r
3Fedratehi
kesin201 7

K
Emergi
ngmar ketsl
ikeIndi
acouldtakereli
efi
nt hef
actthatUSFederalReservest
ucktoi
ts
scr
iptofrai
si
ngi nterestr
atesonthreeoccasi
ons.Thecentr
albankal s
or ai
seditsgr
owt
h
for
ecastf
or2018.Goingfor
ward,i
n2018,theFedhashel
ditspr
oject
ionofthr
eehikes
.

NorthKorea
TensionsontheNor thKor eanf r
ontdomi natedheadlinest hroughtheyear.InSeptemberthi
s
year,thecountr
yr eportedlytestedahydr ogenbomb,bel ievedt ohavethecapabil
ityt
ostri
ke
JapanorUScoas t.TheUNhasbeeni mpos i
ngs anct
ionsont heroguenation.Assuch,t
here
hasbeenahi storytot hiscris
is,but2017i sseenasacr ucialyearbyexper t
sont hebackof
suchconcretestepsbyNor thKor ea.Asar esult
,mar ket
sar oundt hewor l
dhavebeenj i
tt
ery
basedont hes
edevel opment s
,aswel laswor r
iedaboutawar -likes
ituat
ion.

UP,Guj ar
atandHi machalPradesh
Ther ul
ingBhar at
iyaJanataPar ty(BJP)regi
steredmas si
vevi ctori
esinst
ateelecti
onsthi
syear.
Ear l
ierinMar ch,itwonat wo-t hir
dsmajorit
yi nUttarPrades h,fol
lowedbyr et
entionofpower
i
nGuj aratandt akingoverfr
omt heIndi
anNat i
onal CongressinHi machalPradesh.
Thepolit
ical
stabilit
ygavet hemar ket
sext rafil
li
ptobel i
evet hattheCent rewillbeablet opushcrucial
reformst hroughs t
atesandgi veitthedesi
rednumber satRaj yaSabhaaswel l
.
 g h
si n
a t a
a l
n P
i r a
Uni
onBudget

K
Thegover nmentunvei
ledthebudgetamont hinadvancet oFebruary1.Ther ai
lwaybudget
wasmer gedwiththe 
UnionBudget.Thekeydevelopmentf ortaxpayerswasthes l
ashi
ngoft ax
rate
forinc
omeofRs2. 5-5lakhwereto5per cent,whiletherewasabanoncas hfortransact
ions
overRs3lakh.This
,thegovernmentfel
t,wil
lhel
pi nincreasi
ngthet axbase.

CrudeMovement
Theyearalsowit
ness
edas urgeinpri
cesofcr ude.Anys pi
keinthepr iceoft hiscommodi
ty
hurtst
hefi
nanceofi
mporterssuchasI
ndiaalongwi thhurti
ngit
sfinances.Earlierthi
smont
h,
oi
lroseaboveUSD65abar relf
orthefi
rstti
mes i
ncemid-2015foll
owingas hutdownofthe
UK'sbi
gges
tNorthSeaoi
lpipeli
ne,whi
chhelpeds etthebenchmarkforglobalprices.

I
nfos
ys’Si
kkas
aga

Aneventt hatshooktheITsectorandthemar ketsonthatday,Vi s

halSi kkaresignedasthe
ChiefExecuti
ve Offi
cerand Managing Directorof 
I
nfosys
 withimmedi ate eff
ectciti
ng "a
conti
nuousstreamofdis
tract
ionsanddi
srupti
onsovertherecentmont hsandquar ters…".
Sikkacameunderf i
refr
omNar ayanaMur t
hy,whoat t
ackeds ever
aldecisionstakenatInfos
ys
bes
idesSi
kka'
ssuppos
edl
avi
shl
if
est
yle.

I
nt hefi
rstweekofDecember,Sal
ilSParekhwaschosentobetheChiefExecutiveOf
fi
cerand
ManagingDirect
or(CEO&MD)oft hecompanyeff
ecti
veJanuary2,2018.Parekhhascometo
I
nfosysf
romCapgemi niwher
ehewasamemberoft heGroupExecut
iveBoard.

Trump’ si
naugurati
on
Foll
owingani ntensecampaignforUSPr es
idencybetweenHilar
yCli
ntonandDonaldTrump
foral argerpartof2016,thelatt
erwont heel ect
ionsi
nNovember201 6.Ear
li
erthi
syear,
Trumpwass worninasthe45thPresi
dentoftheUnitedSt
ates
.MikePencewassworninast
he
Vice-Presi
dent
.

g h
si n
a t a
a l
n P
i r a
GSTr
efor
m
K
Theyearsawhist
ori
cr ol
l
outofsi
ngl
et axregi
meinthecountr
y—goodsands er
vicestax(GST)
onJuly1.Themoveendedmor ethan1 1year
sofint
ensedis
cuss
ionsbet
weenCent reandt he
st
atesand the GST counci
lannounced f
oursl
absof5,1 2,18 and 28 per
centr atesfor
commoditi
esacr
ossboard.

Ni
ravModiSaga

Thebankingsect
ortookahi taf
terPunj
abNat i
onalBankinformedtheexchangeson14th
Februar
y2018thatitdetect
edsomeunauthor
isedandfraudulenttr
ansact
ionswort
h$1.77
bil
l
ionorRs11
400cror .34oft
es he39l i
stedbanks'shar
epr i
cesf el
lbetweenFebruar
y1 2
andFebr uary15.Thesuddenvol at
il
ityinthepriceserodedt hemarketcapofthese34
st
ocksbyoverRs36, 380crores.Benchmar kBSEBankexl ost1.2percent.PNBeroded
i
nvestorsweal t
hwor thRs8, 077cr oresanditss t
ockt anked20.6percentbet ween
Februar
y1 2andFebr uary152018.Thes harepri
celosswidenedt o25percentti
ll1
2pm
i
ntra-dayt oday.Theval ueofPNBsf raudul
entt r
ansacti
onsar enearl
y50t imesthe
bank'sQ3FY1 8netprofi
tofRs230.11crores.

Therearefourbanksthathavebeendirectl
yaf f
ect
edbys uchunauthori
sedt r
ansacti
onsas
theyhaveoff
eredcredi
tbas
edontheLoUsi ssuedbyPNB.ThesebanksareUnionBankofI ndi
a,
All
ahabadBank,AxisBankandSBI.Letuslookhowt hes
harepri
cesofthesestocksreact
edto
thedevel
opments.

g h
si n
I
ndi
vidual
StockTr
endAnal
ysi
s

a t a
l
TATAMOTORS

P a
r an
K i

I
nlightoft
hebel
owment i
onedeventsthes
tockpr
iceofTATAMot
orshasbeenonbot
hri
se
andfall
inaper
iodofoneyear(
2017-18)

 Tat
aMot or
stanks9% asanal
yst
scutear
ningses
timat
espos
tsubduedQ1nos--1
0
aug201
7
  Tat
aMot
orsr
all
ies5% asTat
aSonsbuyscompany'
sshar
eswor
thRs2,
000cr-1
8sep
201
7

 Tat
aMot
orss
har
esr
iseonQ2number
s–9nov201
7

 Tat
aMot
orss
tockgai
nsaf
terr
isei
nJLRDecr
etai
lsal
e-- 8j
an201
8

 Tat
aMot
orsf
all
sfors
econds
trai
ghts
ess
ion;s
tockdown4% --1
5apr
il201
8

 Tat
aMot
orss
tockhi
tsf
res
h52-weekl
owaf
ternetpr
ofi
tfal
l
s50% i
nQ4--24may
201
8

 Tat
aMotorsst
ockfal
l
s5.94%,toploseronSens
exaft
erDonal
dTr
umpwar
nsof20%
i
mportt
ari
ffonEU-ass
embledcars--25june2018

h
SUNPHARMA

i n g
t a s
a l a
n P
i r a
K
I
nli
ghtoft
hebel
owment i
onedevent
sthes
tockpr
iceofSunPhar
mahasbeenonbot
hri
seand
f
all
inaperi
odofoneyear(
2017-1
8)

 SunPhar
mar
eboundsaf
terf
all
ing4% onQ1number
s--aug1
4201
7

 SunPhar
masharesral
ly7% af
terUSFDAaccept
snewdr
ugappl
icat
ionf
ordr
yeye
sol
uti
on Dec27,2017

 SunPhar
magai
ns5% on3obs
ervat
ionst
oHal
oluni
tfr
omUSFDA --f
eb23201
8

 SunPhar
mas
tockgai
ns8% ascompanycl
ear
sFDA'
sHal
olpl
anthur
dle--JUNE9
201
8

HDFC
 g h
si n
a t a
a l
I
nli
ghtoft
hebelowmenti
onedevent
sthes
tockpr
iceofHDFChasbeenonbot
hri
seandf
all
in

P
aperi
odofoneyear(
201
7-18)

an
 HDFCBank'
sQ1PATj
umps20% t
oRs3,
894cr
ore;gr
ossNPAsr
iset
o1.
24% 
24-7-201
7

i r
 HDFCBanklookstorais
eRs 24,000crvi
asharesal
e.HDFCBankt orai
sefundsvi
aa

K
combi
nat
ionofprefer
ential
allotmentandqual
if
iedins
tit
uti
onal
placementDec21201
7. 

 HDFCBankNSE-0. 12% decl

ined1
.62percentt
oleadthel
oser
s,despi
tet
helender
havi
ngr epor
tedr ecordprofi
t,whi
chgrew20percentandwaslargel
yinl
inewith
marketexpectat
ions. 
Apri
l23,2018

 HDFCBankfal
lsnearl
y5% f
romitsi
ntr
a-day'
shigh:Thestockdipped2.5% atRs2,
058,
f
all
ing4.
6% f
romitsearl
ymorni
nghighofRs2,
157touchedont heNSE..June4,201
8

COALI
NDI
A
 g h
si n
a t a
a l
P
I
nli
ghtoft
hebel
owment i
onedevent
sthes
tockpr
iceofCoal
Indi
ahasbeenonbot
hri
seand
f
all
inaperi
odofoneyear(
2017-1
8)

an
 Coal
Indi
asur
ges7% asf
ir
mhi
kest
her
mal
coal
pri
cesby9% --j
an8201
8

i r
 Coal
Indi
ari
ses4% pos
tQ4s
how --may30201
8

K
 Coal
Indi
adr
ops2% asar
mmayf
aceRs20,
000cr
orepenal
ty--s
ep1
9201
7

BHARTI
AIRTEL
 g h
si n
a t a
a l
P
I
nli
ghtoft
hebel
owment i
onedevent
sthes
tockpr
iceofBhar
tiAi
rtel
hasbeenonbot
hri
seand
f
all
inaperi
odofoneyear(
2017-1
8)

n
 Bhar
tiAi
rtel

a
shar
epr
icesf
all
aft
erJi
oannouncement
s--21j
ul201
7

i r
 Bhar
tiAi
rtel
hit
stwo-yearhi
gh;s
tockup1
6% i
noneweek--oct1
6201
7

K
 Bhar
tiAi
rtel
stockf
all
sover6% onr
epor
tThr
eePi
ll
arspl
anst
osel
lst
akei
ntel
co
--nov142017
 Bhar
tiAi
rtel
shar
epr
icer
all
ies5% pos
tQ4FY1
8res
ult
s--apr
il25201
8
 Bhar
tiAi
rtel
fal
l
sfors
ixt
hst
rai
ghtt
radi
ngday;s
tockhi
ts52-weekl
ow --may
1
8201
8
6.
Bus
ines
sSt
atusofSt
ockExchange

Bus
ines
sSt
atusi
nSt
ockExchange

Name
of the NSE BSE
Scr
ip
1-Jul
-2017 Monthl
y Vol on 1-Jul
-2017 Monthl
y Volon
to 30-June Avg Dai
ly Avg 30 jun to 30- Avg Dai
ly Avg 30 jun

h
-2018 Vol
ume Vol 201
8 June-2018 Vol
ume Vol 201
8

i n g
s
HDFC 689568851 57464070.
9 2758275.
4 4022628 56851
003 4737584 227404.
012 51
891

a
Coal

t
I
ndia 1
058201
840 881
83486.
7 4232807.
36 1
95821
4 89391
743 744931
2 357566.
972 255838

l a
TATA

a
Motor
s 2279203796 1
89933650 9044459.
51 1
476551
6 21
5230620 1
7935885 854089.
762 537854

P
Sun
Phar
ma 1
381
429698 1
151
191
42 552571
8.79 441
6940 1
3140831
5 1
0950693 521
461
.567 1
74438

an
Bhart
i

i r
Air
tel 1
6231
93798 1
352661
50 6492775.
19 34431
46 6081
70394 50680866 2432681
.58 266991

K
 g h
si n
at a
a l
n P
i r a
K
 g h
si n
t a
I
NTERPRETATI
ON

l a
Aswecans eef
romthegraph,t hatthevolumeofbusines
sinNSEismorethanthati
nBSEand

a
thevol
umeofbusi
nessdefi
nesthes pecul
ativeact
ivi
ti
estoagreatext
ent
.Hence,itwi
llbes
afe

P
tosaythatt
her
eisnospeculat
ioninNSEt hanBSEs tocks
.

n
Asvolumesmai nl ytel
l aboutthes pecul
ati
venatureofst
ocks
,apartf
rombeingconcent
ratedin

a
thehandsofmar ketpr of
essionals,vol
umesals
ot endtobeconcentratedwit
hinahandfulof

i r
stocks
.Oft het otalturnoveront heBSEandt heNSE,over60% isconcentrat
edinjust10
stocks
.Cl earl
y,vol umest ellveryl i
ttl
eaboutas t
ock’
sfundamentals
,whichwi l
lul
ti
mately

K
determinemedi umt olongt ermr eturns
.

I
nthi
scasestudy,wehavet
riedt
ofi
gur
eoutt
he1
0mos
theavi
lyt
radeds
tocksf
ort
hepur
pos
e
ment
ionedabove.
St
atusVol
umeofBus
ines
sofDel
iver
yBas
ed(
DB)andNon-Del
iver
yBas
ed(
NDB)

BSE
1.
07.201
7 t
o
NAME 30.6.
2018 Mont
hlyAvgVol Dai
lyAvgVol Vol
on30j
une
  DB NDB DB NDB DB NDB DB NDB

4460249 4478925 3732437.

7 371
6874.
1
Coal
Indi
a 0 3 371
6874.
17 5 7 1
791
57.
01 1
121
96 1
43667.
17

3482649 2202450 2902208.

2 1
835375.
3 1
39305.
99 88098.
01 34663.
566
HDFC 9 4 5 3 6 6 1
7228 3

h
1
172271
0 81
66959.
2 9768925.
7 39201
4.04 468908.
4 404402.
97

g
TATAMot
ors 9800351
1 9 5 5 4 4 1
3351
0 3

i n
88051
29 361
3084.
9 1
73428.
07 352205.
1

s
SunPhar
ma 4335701
9 6 2 7337608 6 8 60997 1
13429.
651

a
4722052 1
359651
3 39350438. 1
888821
.0 543860.
5 20445 62527.
852

t
Bhar
tiAi
rtel 61 3 4 1
1330427.
8 4 3 7 4

l a
7061
870 753843.
83 5884892.
2 282474.
8
Rel
ianceI
nfr
a 90461
26 7 3 5 361
84.
504 3 38008 21
2539.
132

P a
3434930 43041
04.
4 2862442.
3 206597.
01 1
37397.
2 97356.
882
Pet
ronetLNG 51
649253 8 2 3 2 3 50243 5

n
1
34757.
58 93556.
583 5897.
2705

a
Br
itanni
a 1
617091 1
122679 3 3 6468.
364 4490.
716 2368 1

K i r
JVL Agr
o 55430.
89 79746.
68 9787.
0574
I
ndust
ries 1
3857724 1
9936671 1
15481
0.33 1
661
389.
25 6 4 1
5921 8

Manali
Pet
rochemi
ca 2233202 379451
7
l
s 5 0 1
861
002.
08 31
62097.
5 89328.
1 1
51780.
68 50683 9601
1.
6454
 g h
si n
at a
a l
n P
i r a
K
 g h
si n
a t a
a l
P
NSE

r an
NAME 1
.07.
201
7to30.
6.201
8 Mont
hlyAvgVol Dai
lyAvgVol Vol
on30j
une

i
  DB NDB DB NDB DB NDB DB NDB

K
55755427 50064756 46462856.
3 2002590.
2
Coal
Indi
a 6 4 3 41
720630 223021
7.1 6 871
460 1
086877.
08
904324.
40
HDFC 49777851
8 1
91790333 41
481
543.
17 1
5982528 1
991
114.
07 7671
61.
332 31
18471 8
96364206 80303505.
7 3854568.
2 8005296.
3
TATAMot
ors 9 1
315561
727 5 1
096301
44 8 5262246.
91 67591
75 8
2078290.
3 2707430.
9
SunPhar
ma 51
9572597 861
8571
01 4329771
6.42 71
821
425 9 3447428.
4 1
709259 2
66966259.
8 3278394.
7
Bhar
tiAi
rtel 8035951
18 81
9598680 3 68299890 321
4380.
47 2 1
858004 1
585294.
74

Rel
ianceI
nfr
a 8451
2873 521
53371
0 7042739.
417 43461
143 338051
.492 20861
34.
84 940063 261
5394.
64

Pet
ronetLNG 61
4532469 3861
92876 51
211
039.
08 321
82740 24581
29.
88 1
544771
.5 261
201
1 2367041
.61

Br
itanni
a 21
547253 1
451
8751 1
795604.
417 1
209895.
9 861
89.
012 58075.
004 90433 671
70.
6947

JVLAgr o 8238474. 395446.

78
I
ndust
ries 71
222290 98861
697 59351
90.
833 8 284889.
16 8 1
92837 71
540.
5706

Manali
Pet
rochemi
cal 473468.
70
s 90925474 1
183671
76 75771
22.
833 9863931
.3 363701
.896 4 706534 777781
.1
26
 g h
si n
at a
a l
n P
i r a
K
 g h
si n
a t a
I
NTERPRETATI
ON

a l
Secur i
tywisedel i
verypos i
tionmeans ,numberofs haresmar kedf ordeliveryf rom thet otal
tradedquant i
ty.Inmyopi nion,securitywisedel
iverypos i
ti
oni soneoft hecr ucialanalysi
s,as

P
ittell
show manyi nvest
orsar ewi l
li
ngt oacceptt hes haresint heirDemataccount .Ahi gher

n
deliver
yquant it
ymeanss erioustradingandbal ancei sintr
adaypl ay.Mos toft heanal ysts

a
givei mport
ancet o volumeort raded quantit
y.On t heot herhand,i nvestorsgivemor e

i r
impor t
ancetodel i
veryquant it
y/deli
verypercentage.Forex.Tot altradedquant it
yofas t
ockA

K
is100.Assumingoutof1 00,del i
verablequanti
tyis60.I tmeansbal ance40s har esweret raded
intr
a-dayandonl y60s haresar emar kedfordelivery.Thedel iveryper centageof60% i svery
cruciali
nthisexampl e.

Recently,therewasas uddenspurtinthevolumesofRedi ngtonI ndia.Onefi

neday,t
hevol
ume
ofas tocks hotupto1161368againstt
helastfivedays’saver ageof24431 8i.
e.al
most5ti
mes
.
Aspers ecur i
tywisedel
iveryposi
tionanalys
is,thedel
iveryvol umeal sojumpedfr
om5dayavg
of129754t o273678.Asani nvestor
,onewi llbehappyt hatdel iver
yvolumedoubl
edand
withouts econdthoughtonewouldhavei nvestedinRedingtonI ndia.

Thereisacatch.Thought hedel
iveryvolumedoubledbutont hedayofvolumes purtthe
Deli
very% wasonl y23.57%.Wher easmovingaveragewasappr ox.50%.In-s
hor thuge
Specul
ativei
nt r
adayactivit
yont hedayofvolumei ncr
ease.Onecani nves
tbasedonvol ume
ordeli
veryvolumeinSecur i
tyWiseDel i
veryPos
iti
onanalysis
.

I
mpor t
anceofDel i
ver
yPer centage
Asweobs er
vedt hatdeli
veryvolumei snotabletocapt
urethesharpdeviationsinvol
umeand
i
ntr
adayact i
vit
y.InSecurityWi s
eDel i
veryPosit
ionanal
ysis
,aninvest
ors houldcheckfor
Del
iveryPer
centagei.e.% ofDeliver
ableQuant i
tytoTradedQuantit
y.Thi sisoneofthe
Matri
cestoidenti
fyas t
ockt r
end.Ifthereisanincr
easeinDeli
ver
yPer centagethenitimpl
ies
thatinvest
orsar eaccept i
ngt hedeli
veryoft hes tock.Whi chinter mimpl ythatinves t
orsare
bulli
shons t
ocki .e.theyant icipat
ethestockpr i
cet oincreasefur t
her.Thes ecuritywise
Deliver
yPos i
tionf i
leavai l
ableonNSEwebs i
t eisforas i
ngleday.
Youneedt ocapt uret hisi
nformationoveraper iodoft imet oestabli
shthet rend.Ani nvestor
Does n’
tinvestins tockswhos edeli
verypercent agei slessthan50%.I nt hisDeli
ver yPosit
ion
analysi
sweobs ervedt hatstockswithgreatert han50% del i
verypercent ageprovi demore
stableret
urns.Ther ecentexampl eisofMar ut i
.Thes t
ocks enti
ment ssuddenl yturnednegat i
ve
afteradowngr adef romoneoft heforei
gnr atingagency.Ther ewass uddendel iverybased
sell
ingwiththedecr eas ei
ns tockpri
ce.

Iobs
ervedstr
ongco-rel
ati
onbetweenDel
iver
yPercent
ageandt
heSt
ockPr
ice.Let
'ss
eeal
l
poss
ibl
escenari
osandtrytol
inkwit
hthecasest
udy:

g h
(
a)I
ncr
eas
einDel
iver
yPer
cent
ageandI
ncr
eas
einSt
ockPr
ice:

si n
I
ts howsBULLISHTr endi ntheSecur i
tyWiseDeli
ver yPosi
t i
onanalysi
s.AsImentionedt hati
t

a
meansi nves
torsareaccept i
ngdel i
veryofs
tocki.
e.buyi ngforalongterm.I
nt hi
ss cenario

t
thereisapossi
bi l
it
yoff ur
therincreasei
nstockprice.Nowi tdoesn’tmeanthatafterincreas
e

l a
whent hedeli
ver yper centagecoolsofft
henyous ellthestock.Aft
erthebuyingthedel i
very

a
percentagewil
l cool offnearlong-termmovingaver age.Recentexamplesi
nt hi
s

P
categoryareCoal India,HDFCet c.

n
(
b)I
ncr
eas
einDel
iver
yPer
cent
ageandDecr
eas
einSt
ockPr
ice:

i r a
AsI di
scussedint
hecaseofMar ut
itheincreaseinDeli
ver
eyPercent
agewithadecr eas
ein

K
StockPricemeansinvest
orsareoffl
oadingl ongposi
ti
ons.I
tisnotagoodsignforthest
ockand
st
ockpr i
cemayf al
lfurt
her.Inshort.Del
iverybasedsel
li
ngisasignofBear
ishTrendand
i
nves t
ors houl
dexi
tthestock.

(
c)Dec
reas
einDel
iver
yPer
cent
ageandI
ncr
eas
einSt
ockPr
ice:

I
nSecur it
yWi seDeli
veryPosi
ti
onanalysis
,ifyouobs erveadecr easeindeliveryper centage
thenitimpli
esstocki
snowi nagripoftradersands peculat
ors.Italsoimpli
esver yhi gh
i
nt r
adayact i
vit
y.Normall
yinvest
orsfai
ltoidentifythi
strendast hes t
ockpr i
cei sincreasing.
Thought hestockpri
ceisi
ncreasi
ngbutbeas s ur
edt hatthi
strendi snormallyshor t
-lived.In
pastIidenti
fi
edthist
rendinICI
CIBankandt hes tockcoll
apsedaf terward.Cur r
ent l
y.I observe
thi
st r
endinHDFCBank,Tat aMot orset
c.Ins hort,pri
ceuptrendisnots ustainable.

(
d)Dec
reas
einDel
iver
yPer
cent
ageandDecr
eas
einSt
ockPr
ice:

Adecr eas
einDeli
very% andDecr easeinStockpri
ceduri
ngSecur i
tyWi s
eDel i
very
Posit
ionanalys
ismeanstherei
sapos sibil
it
yoftr
endrevers
alveryshortl
y.Inotherwords
Stockisonthevergeofabreakout.Inlaymanterms,t
hereisanincreas
edi ntr
adayacti
vit
y
accompaniedbyadecr eas
einstockpr i
ce.Wecanconcludethatspeculators
/trader
sare
off
loadingt
heirpos
iti
ons
.Theyar eant
ici
pat
ingt
her
ever
sal
ins
tockpr
icet
rend.Cur
rentI
observethi
str
endinBhartiAi
rtel
etc.

7.
Rel
ianceI
ndus
tri
esLi
mit
edSt
ockPr
iceCas
eSt
udy

Reli
anceIndust
riesLimited (
RIL)isIndi
a’slar
gestprivat
es ect
orcompany wi tha
consol
idat
edrevenueofI NR129,120Cror
e( $1
9.8Bil
l
ion),cashpr of
itofINR15,408
Crore($2.
4Bil
li
on)andnetpr ofitofI
NR9,435Crore(
$1.4Bil
li
on)forthefi
nanci
alyear
thatendedinMar ch312018.

h
st
RIList he1 pri
vatesectorcompanyf romI ndiat ofeat ureinFortune’ sglobal500listsof

g
th
Wor ld’sLar gestCorpor ati
onscur rentlyr anking1 48 i ntermsofr evenueand1 26th

i n
(2018) intermsofpr ofi
t.RI Lranks238th int heFTGl obal’
s500l ist( 2015)OFWor l
d’s

s
th
Larges tCompani es.RILr anks83 i nt heFor be’sGl obal2000l ist(201 8)
,cont i
nuingt o

a
bet het opr ankedIndiancompany.RI L’
sact ivit
iess panhydr ocar bonexpl orati
onand

t
product ion,petrol
eum r efi
ningandmar keti
ngpet rochemi cal
s,r etailand4Gt elecom

l a
service.

P a
r an
K i

Af
teral
ongphas
eofs
teadygr
owt
handt
her
eaf
terhavi
ngmor
eorl
essf
latf
ors
ome
ti
me,t hesharesofRILshowsanupwar dtrendinaper iodof3mont hsduet oanumber
ofr easonsaswel istbel
ow.I nsuchs i
tuationfocusismadet oobs ervethesc
aleof
st th
speculati
veactivi
ti
eswitnessedi
nt hestockf ortheper i
odofJuly1 t oJune30 and
alsoascertai
nthecontri
but i
onofstocktoSENSEXt hathasbeenregisteredatarecor
d
th
highof38000poi ntson9 Augus t2018inthehistor
yofI ndi
anstockmar ket
.

I
nter
pret
ati
onofs
omeeyecat
chi
ngevent
sdur
ingt
hel
astf
inanci
alyear
 Rel
iances
har
esr
iseover3%,mar
ketval
uat
ionupbyRs
16,
104cr
ore

 SharesofRel
ianceI
ndus
tri
esLt
d(RIL)sur
gedover3% t
ohi
tani
ne-yearhi
ghand

h
addedRs16,
104cror
etoit
smarketvaluat
ion.

n g
 Thes
tockj
umped3.
43% t
ocloseatRs1
,490.
80ont
heBSE.Dur
ingt
heday,i
tsoar
ed

si
3.
85% t
oRs1,
497—i
tsmul
ti
-yearhighl
evel.

t a
 RIL’
sscri
pwast hetopper f
ormeramongthe30-Sens
excomponents
.AttheNational

a
StockExchange(NSE),sharesoft
hecompanyroseby3.
36% t
oendatRs 1,
491.
15.The

l
company’smarketvaluati
onzoomedRs16,1
04.
42croret
oRs4,
84,743.42cr
ore. --- 7

a
jul
y2017

n P
a
 Rel
ianceI
ndus
tri
ess
har
esgai
nnear
ly4%,hi
tt
ingover9-yearhi
ghons
trongQ1

i r
ear
nings

K
 SharesofRelianceIndustr
iesLtd(RI
L)gai
nedasmuchas4. 1
5%,hitt
ingafr
esh
nine-and-half-yearhi
gh,afterthecompanypostedstr
ongear
ningsonbett
er-
than-expectedgr ossr
efi
ningmar ki
ngsandrobustpet
chemearni
ngsbef
ore
i
nt er
estandt axes(Ebi
t). ------ Jul 212017

 RI
Lannounces1
:1bonus
,st
ockj
umpst
o52-weekhi
gh


Reli
anceI
ndustr
ies(RI
L)hasannounceda1 :1bonusf
orits 
i
nit
ialpubl
icoff
er
(I
PO).Thi
swill
bet heenergy-to-tel
ecomconglomerat
e’sf
irs
tbonuss har
e
i
ssuancei
neightyearsandf ourt
hi ni
tsl
is
tinghis
tor
y.--22j ul
y2017

 RI
Lshar
eshi
trecor
dhi
ghaf
terJi
oPhoneannouncement

 SharesofReli
anceIndustr
iesLtd(RI
L)cl
osedatar ecordhi
ghonMondayas
i
nvestorsconti
nuedt obuythestockonopti
mismt hatit
searni
ngsmayi mprove
fur
theraftert
heful
l commissi
oningofi
tscorer
efiningandpetrochemi
cals
proj
ectsandbecauseofi t
saggressi
vemovesinthet el
ecomsegment.
 Duri
ngtheday,t heRILs
tockgai
ned2.
5% t
ohi
tRs1
,624.
80,alevel
lasts
eenon
1
5Januar y2008.Its
hedsomeofthegai
nst
ocl
oseatRs1
,61
6.1
0,up1 .
89% f
rom
i
tsprevi
ousclose.--- j
uly252017

g h
 Rel
ianceI
ndus
tri
ess
tocks
oar
sover3% t
ohi
tal
l
-ti
mehi
gh;l
eadsSens
ex,
 
Nif
ty

si n
 Reli
anceI ndustri
essharesadvancedover3% onWednes daytohittheal
l-t
ime

a
high.Shar esoftheMukes hAmbaniledoil-t
o-t el
ecomcongl omerateros
eas

t
muchas3. 26% tothelif
etimehighofRs850.15onBSEt oday.Reli
ance

l a
I
ndus tri
esistheonlyIndians cr
ipwi
thamar ketcapi t
ali
sationofoverRs5lakh

a
crore,asperTues day’scloseofRs823.3themar ketcapofRI LwasatRs

P
5,35,509.87.Todayithasaddednear lyRs15,000croreinitsmarket
capital
isationtoRs5,50,730.25. --------------- sep132017

r an
 Re
li
anc
eIndus
tri
esBe
come
sFi
rs
tCompanyToCr
ossRs
.6Lak
hCr
oreMar
ketCap

K i
 Mar ketval uati
onofRelianceIndustr
iesLtd(
RIL)cros
s edtheRs .6lakhcr ore-
mar katthecl oseoftradeonWednes day,becomingt hefi
rstcompanyt oreach
thismilestone.Reli
anceIndustri
escommandedamar ketcapitali
sati
onorM-
CapofRs .6,03,097.
82cr or
eorabout$93bi l
li
onwhent hestockmar ket
closed. 
Shar esofReli
anceIndustri
esended1.22percenthi gheratRs .952.30on
theBSE( BombaySt ockEx change).Duringt
heday,t heyhadj umped1 .
76per
centt oRs.957. 40.
 

Ont heNSE,thecompany'
sst
ockr os
eby1 .
24percentt
ocloseatRs.952.
55.
RI
L'smarketval
uati
onhadonOct ober24cros
sedtheRs.6lakhcr
oremarkfora
br
iefperi
odont heNSE.
 --------------- nov22017

 Rel
ianceI
ndus
tri
esdr
opsasMoody'
slower
scr
edi
tout
look

 Shar esofReli
anceIndustri
esNSE-0.81% droppedover1percentinMonday'
s
tradeaf tergl
obalr
atingagencyMoody' sloweredt
hecr edi
toutl
ookontheoil
-
to-telecomconglomer at
eto' s
tabl
e'fr
om' posi
ti
ve'
,cit
ingalikel
ynegat
ivef
ree
 cas
hfl
ows
ituat
ionduet
oheavydebtr
epayment
sovert
henext1
8mont
hs

Ther
ati
ngagencyt
houghr
etai
nedt
heBaa2r
ati
ngsRel
iance'
slong-t
ermdebt
.

Fol
lowingt
hedevel
opment
,thes
tockf
ell
1.1
8percentt
ocl
oset
hedayatRs
934.45onBSE 
.
.---- nov62017

 RI
Lshar
egai
ns2percentaf
ter1
0-year
-bonds
aleatl
owes
tpr
ice,r
ais
esRs800mi
ll
ion

 Reli
anceIndustr
ies(
RIL)onTuesdaygotanups ideofover25percentandgained2per
centasGoldmanSachshi kedthetargetpr
icefromRs960t oRs1,205.Gol
dmanSachs

h
sai
dinas tatementthatRI
Lprovidedthebestlarge-capdownstr
eamener gyexpos
ure

g
inAsia,andthatthecompany'soperati
ngincomecoul ddoubl
eto$1 4bi
ll
ioni
nMar ch

n
2020. ----------- nov21201 7

si
t a
 RI
Lshar
esgai
naf
terexpans
ionatJamnagarr
efi
ner
y

l a
 Shar
esofoi l
-to-tel
ecombehemot hReli
anceIndus
tri
es(RILNSE-0.81%)wer e

a
tr
adi
nghi gherinearlytradeonWednes dayaft
erthecompanys ai
di thas

P
commiss
ionedt hewor l
d'slar
gestr
efi
neryoff
-gascracker(ROGC)compl exat

n
Jamnagarwhi chwilluserefi
ner
yprocessres
iduetoproducefeeds
tockus edt
o

a
makepetrochemicals.

K i r
TheROGCi spartoft
he$1 1bi
ll
ioncapi
talexpendi
tur
eRILhadannouncedinone
oft
helargestbr
own-fiel
dexpans i
onofenergyandpetr
ochemical
project
s
gl
obal
ly
 Shar
esoft
hecompanyopenedatRs924.
45andt
ouchedahi
ghandl
owofRs
927.20andRs91
3.30,r
espect
ivel
y,event
ual
l
ycl
osi
ng0.
54percentupatRs
916.
35.------- jan32018

 RI
Lshar
esj
umpover3% onr
ecor
dnetpr
ofi
t

 SharesofReli
anceIndus
tri
esLtdjumpedasmuchas3.1percentt
oRs958,ast
he
companyhaspos tedarecordconsol
idat
ednetpr
ofi
tinthethi
rdquar
ter
,hel
pedby
fi
rst
-everproftatJi
i otel
ecomsbus iness.
 Wit
hi nninemonthsofitscommercial
launch,Ji
o,t
het el
ecomnetworklaunchedby
Muk eshAmbani,tur
nedpr ofi
tabl
e.Ji
o,awhol l
yowneds ubsi
diar
yofAmbani ’
s
Rel
ianceIndus
tri
es,reportedanetproftof₹504cr
i or
ei ntheDecember2017quart
er.

 Ji
o’spr
ofi
tandhi
ghes
tevermar
ginsi
nthecongl
omer
ate’
spet
rochemi
cal
sbus
ines
s
 boost
edReli
anceIndus
tri
es’netprofi o₹9,
tt 423crorefort
hequar t
er,up25.1percent
year
-on-year.Thepet
chembus i
nes sbroughtinrevenueof₹33,726crorethi
squarter
,
up47.6percentfr
omthesameper iodlastyear. ----------------- 22
j
an2018

 RI
Lrepor
ts$1
.4bi
ll
ioni
nnetpr
ofi
t;t
op1
0takeawaysf
romQ4r
esul
ts

 Theconsol
idatednetprof
itroseby17.3percentonayear-on-yearbas
istoRs9,459
cror
eor$1.14bil
li
on.Thestockwhichrosetoar ecor
dhighaheadoftheresul
tscl
osed
2.
1percenthighertoRs996.30.I
thitarecordhighof101
1andal owof985.
50.------
apri
l272018

 RI
Lsharepr i
cefal
lsover3% t
odayasMukes
hAmbani
-fi
rm’
shi
ghes
teverpr
ofi
tfai
lst
o

h
amuse 
brokerages

n g
 Sharesofoi l
-to-t
elecom 
conglomer at
eRelianceI
ndus t
riesLtd( RI
L)fellmorethan3% i n

si
themor ningdealsonMondayevenaf tertheMuk eshAmbani -control
ledenterpris
e

a
report
edt hehighesteverquarterl
yprofitf
ortheJanuar y-Mar chper i
odoft hefis
cal

t
year2017-2018.RILsharepri
cewasamongt hebiggestlosersont heBSESe nsexon

l a
Mondayf ol
lowingthemixedreactionfromt hel
eadingbr okeragespos tQ4r esul
ts.RIL

a
sharepriceextendedlossesi
nt heweehour softr
adi ngafteropeni ngdownover1 % at

P
Rs 
984.7onBSEonMonday. ----------Apr il30,2018

r an
Cont
ribut
i

K
onofSpecul
i
ati
veact
ivi
ti
esonVol
umesofBus
ines
s

1
STJULY201
7-30JUNE
  MONTHLYAVGVOL DAI
LYAVGVOL VOLON30THJUNE
201
8

RI
L DB NDB DB NDB DB NDB DB NDB
BSE 5737021
1 66601
37 4780850.
92 398404.
2 229480.
8 26640.
55 65061 1
29966
NSE 794054004 756208709 661
711
67 6301
7392 31
7621
6 3024835 4374071 3591
820
 g h
si n
at a
a l
n P
i r a
K
 g h
si n
a t a
a l
P
I
NTERPRETATI
ON

r an
i
I
tshowss li
ghtlyBULLISHTr endint heSecurit
yWi s
eDel i
veryPosit
ionanalysi
s.AsI

K
mentioneditmeansi nvest
orsareaccept i
ngdel i
veryofs t
ocki.e.buyingforalongter
m.
I
nt hi
sscenario,ther
ei sapossi
bilit
yoffurtherincreaseinstockprice.Nowitdoesn’t
meant hatafteri
ncreasedwhent hedeli
veryper centagecoolsofft
henyous el
l t
he
st
ock.Afterthebuying,thedeliverypercentagewi llcoolof
fnearlongt er
mmovi ng
average.
Atsomeins
tancesthevolumeoft
radedquanti
tyi
swaymor et
hanthatoft
heusual
tr
adedquantit
y.I
sitsponsor
edtr
adingorisi
tpeopl
enotr
elat
edtoReli
anceI
ndust
ries
i
sat opi
cwhichneedstobedebateduponandtobeenqui
redto.
Wecans eet hatthedel
iverabl
equanti
tyisal
mostneckt
onecki ncompari
sonoft hat
ofnon-del
iverablequanti
ty.Hence,weconcl
udeofthemarketbei
ngsli
ghtl
ybul l
i
s h
aboutthestockandinvestorshavi
ngfai
ththats
tockwil
lgoupwhi l
esomes pecul
ating
thati
tmightnot .
Rel
ianceisonl
yas ur
pri
seannouncementawayfr
omei t
herheavyr
isei
nvol
umesof
tr
ansacti
onsortanki
ngcomplet
ely.Onl
ytimecantel
l
.
CONCLUSI
ONS

Speculati
oni st heoneabi li
tytopr edicttheevol utionofstockexchanger at
ewi ll
win,
whi l
etheot herwi l
llos e.Theexi st
enceofwel l
-informedspeculatorsisabenefi
tfor
stockmar kets,asthei roper ati
onsat tenuat estockexchangeos cill
ati
onsandt heref
ore
theinvestorswhoi nt er est
edi ninvestment sors alesaremor eeasil
yabletofind
counterparty.Itisaf actt hatstockmar ketspeculat i
oninnecessaryand,cont r
aryto

h
appearances ,itdoesnotvi oletethicalrulesasl ongast hespeculatorprof
it
sisnotfree,

g
butisther esultofther is
kswhi chhehasas sumed.

si n
Mostti
mest hereisawr onglymadeconf usionbetweent heconcepts“specul ator”and

a
“gambler”.I ngener al,thes peculat
orisapr udentperson,well
informed,wi thar ich

t
port
fol
ioofknowl edgei nstockmar ketarea,beingcenteredonrationalf
or ecas t
s,

l a
whil
ethe“gambl er”r eli
esmuchonl uck.Compar is
on,anexper i
encedinves torwi l
luse

a
i
nappr opriateandef fecti
vemannerbot hofr at
ionaleconomicanalysi
sand

P
unders
tandi ngofhi sbehavi orandofot hers.Inway,hewi l
lbeabletoaffectt he
perf
ormanceofi t
spor tfol
iolessthanthatwoul ddoani nexperi
encedinvest ors,whoi s

n
easi
lyi
nfluencedbyr ecentdevel opmentsinitsportf
oli
ooront hemar ket
.

i r a
K
REFERENCE

 www.
bsei
ndi
a.com

h
 www.
nsei
ndi
a.com

g
 www.
moneycont
rol
.com

si n
 www.
inves
topedi
a.com

t a
 www.
economi
cti
mes
.com

l a
 www.
for
bes
.com

a
 www.
for
tune.
com

n P
 www.
ri
l.
com

r a
 www.
bus
ines
s-s
tandar
d.com

K i
 www.
tat
amot
ors
.com

 www.
hdf
c.com

 www.
coal
indi
a.com

 www.
sunphar
ma.
com

 www.
air
tel
.i
n

 www.
bus
ines
sli
ne.
com

 www.
li
vemi
nt.
com

 www.
fi
nanci
alexpr
ess
.com

 www.
bus
ines
stoday.
com

 www.
ndt
vpr
ofi
t.
com