Market gains,but unstable
Listen carefully to the stories of those who have failed in stock market. This way you can get hold of mistakes which lead to loss of money.
INVESTMENT MATTERS BY SAJJAD BAZAZ
LISTEN carefully to the stories of those who have failed in stock market. This way you can get hold of mistakes which lead to loss of money.
A few weeks back one of my friends hailing from Mumbai on a holiday trip to Kashmir uniquely compared Kashmir with stock market. He was fascinated by the changing moods of weather in a day and called it most unpredictable weather. ‘It’s like our stock market which is also unpredictable, but not harmful as the stock market’, he said and added that the swing in market brings more tsunami in investors’ investment portfolios and wipes wealth of investors than throwing opportunities to reap profits.
The performance of markets in 2012 so far vets the statement of my acquaintance, as the swings speak about the most unpredictable nature of the markets. The week ended June 8 proved a good week for the markets. The 30-share index, Sensex gained around 5 per cent (753.71 points) to 16,718.87 for the week ended June 8, 2012. On the other hand, the broad based NSE Nifty too registered around 5 per cent surge (226.75 points), to 5,068.35 during the week. Notably, on June 1, the sensex had closed at 15965 and the Nifty had bunged at 4,841.60.
Precisely, the week gone witnessed the markets posting their biggest weekly gains of the year. Both indexes gained every day during week to mark their longest winning streak since January 2012.
What’s in store for investors next week depends upon the Reserve Bank of India’s (RBI) rate decision which has its correlations with the April IIP as well as the May Inflation data to be released this week. The monsoon progress will also be one of the factors driving the markets. Global cues like the election outcome in Greece will be the major event to watch out for. Crude prices have softened and the Brent crude is below the USD 100 / barrel mark, which provides some cushion to the country`s finances. Besides, the strengthening of the rupee will also add stimulus to the markets.
So, for the week starting June 11, the investors need to adopt wait and watch policy. Foreign Direct Investment (FDI) policy on insurance sector is in process, so they need to monitor the insurance business company shares. They should also watch the financial company scrips and bank stocks as the government policy decisions is on cards to control inflation and rupee falling against US Dollar.
There are experts who predict on the basis of global economic issues that the markets poised for strong returns on long term basis - over the next three to five years. They see the markets ‘at least quite close to the bottom.’
Meanwhile, in the given market situation, we cannot ignore reforms as important pre-requisite for the markets to stabilize and move up.
Local investors have developed a habit of listening to success stories in investment markets. An investor’s story about making hefty profits out of his investment portfolio lures them to park money in the market. They invest in various shares and it doesn’t matter whether they are well versed with the pros and cons of the market or not.
Some four years back, a flourishing local businessman dealing in handicrafts got lured to divert a portion of his capital into the stock market. “I have invested Rs.10 lacs in various shares to support my domestic expenses by 2000 to 3000 rupees daily”, he said. He was basically referring to daily trading activity and was told by his acquaintances about booking of profits on daily basis. But there was something else in store for him. With every passing day, his capital investment in stock market started wiping out as he registered losses consistently in the trading. Today, he is a shattered man with more than a crore liability struggling to square payments as he owes money to the bank, friends and relatives.
There are many likes of this businessman and the cause of such stories of miseries has been greed and lack of knowledge of the market dynamics. It’s advisable to listen carefully to the stories of those who have failed in stock markets and this way you can get hold of mistakes which lead to loss of money in the markets.
Notably, more than 90% of day traders lose money in share trading (intraday, margin). Since the market is unpredictable, no analyst provides 100% accurate guarantee tips.
(The views are of the author & not the institution he works for.
Lastupdate on : Sun, 10 Jun 2012 21:30:00 Makkah time
Lastupdate on : Sun, 10 Jun 2012 18:30:00 GMT
Lastupdate on : Mon, 11 Jun 2012 00:00:00 IST
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