Today, with the internet revolution, more and more people would like to venture in to stock market for share trading, buying Mutual Funds or investing in Gold ETF funds and also to do Commodity Trading. Some investors and speculators also do forex trading. This has been made possible by numerous online stock brokering firms offering their best products and services. Some of the stock brokers also provide free trading account without any opening charges. However, one has to check all charges including DP charges for holding the shares in their DEMAT account.
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Global stock market melt down started as sub-prime crisis in US and no one thought that the entire global market will follow it. India's stock market was making historical gains just prior to the crash. Last year, there was a huge correction due to PN(Participatory Note) issue triggered by tightened norms of SEBI. But, after few days with an assurance from the Finance Ministry, stock markets of India were back in the lime light.
After everyone thought that sub-prime crisis and fear of great slow-down of economy in US were almost over, then came the oil crisis and global food crisis. The crude oil threat has a spiralling effect on inflation. To control inflation Banks are forced to take corrective actions like increasing the interest rate to reduce money circulation and buying power, which in turn affects the borrowing capacity of people. Realty and Banking sectors get directly and heavily affected. Moreover, in India the demand for US dollar goes up as FIIs pull out their investments, so the Rupee weakens against USD. This is good for export units like Textile Industry and IT sectors. At the same time importers have to pay more, so their profitability will be affected in the coming months. Share market investors should take into consideration all these factors and should have a diversified portfolio to balance out these parities. As food crisis may grow in the coming months, Govt. may take more care for Agri and Fertiliser sectors. So these sectors may do well in future.
No market expert can predict when one can buy the stocks and when one has to sell and wait to re-enter at lower levels. The technical softwares, can only show support and resistance levels in the chart for the current term. But, there are so many external factors that control the price movement of the stocks. The investor should closely follow any company related info by going to company's website and take a informed decision. There may be a flash news on the business channels about new orders or some court's order in favour of company which may trigger a sudden rally on the stock. Any trader who just took a short position would be at loss due to lack of information. It is advisable to buy shares on a buying rally than while the market is crashing. There is a possibility that the share price may fall further resulting in a loss. Again, analyzing the reasons and taking the decision is always better. For those who invest in a long term horizon, need not worry much as only stock market investments would give better returns than any other investments in the long term.