News or Factors That Affect Stock Prices

Many People has always wondered how news or different factors has an effect on stock prices. Essentially, It has two parts

First- The type of News of Factor
Second- Its nature, i.e. positive or negative

One has to be smart enough to decode the news and take the position quickly in the stock. People who are adroit in this do make good short term gains even if we leave the insiders or fund houses that generally have good information much before the release of news (I presume so).

I was reading an article from some research paper that did a study on relationship of fund house investment and their holding in a particular stock. What they found out was most of the fund houses exit the stock much early than the release of numbers by the company.

Considering above I think there is little opportunity but then chances are that news is there in market and fund houses are smart enough to read the signs. What individual investors look for is immediate gains but if they play right on news than chances are sooner of later one might see the results.

As I write, I don’t see many clues about anything except that at times it does work. So if it does than why not try it through paper trade to start with.

Below are different types of news that affect stock price. Keep your eyes and ears open and try to come out with a pattern. Who knows it might work for you. Good Luck.


1. Crude Prices
2. Macroeconomic Data (IIP, Inflation, GDP, Industrial Growth, Consumer confidence,
Employment, Unemployment etc)
3. Government/Politics
4. Draught/Monsoon
5. Federal Policies (Interest Rates, Monetary Policies)
6. Company Results
7. Global Cues
8. FII activities
9. Stock Manipulations
10. Insider Trading
11. Mergers
12. Acquisitions
13. Money Markets
14. New Orders
15. Buy Back
16. Bonus
17. Split
18. Tax Benefits
19. Change in stock Group
20. Inclusion in an Index
21. Loss of customer
22. Short and Long Positions
23. Spinoff of arms
24. Lawsuits (win or loss)
25. Change in Demand
26. Change in Supply
27. Budget
28. Raw Materials
29. War
30. Terrorist Attacks
31. Management Changes
32. Dividend
33. Rights Issue
34. Joint Ventures
35. Business Expansion
36. New Invention
37. Rumors

If you know more than Leave a comment. I am very much interested to build this list further.

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Don’t Get Swayed by Self Styled Analysts

Rising markets are back again and so are self styled analysts who have come out from hibernation to mint money again. You can see them everywhere in both online and offline media. I was surprised that a magazine who was till yesterday talking about negative sentiments is now talking about how next bull run has started. While it is easy for some to comprehend the current situation there are some gullible investors who get trapped. Nothing has ever destroyed the investment if the people than the stock markets all over the world. Despite of this even a small positive sign in stock market attracts lot of people and they flow in herds to invest their hard earned money.

While it does not surprise me but what concern me is another phase when innocent people would get cheated. Well the one who needs to be blamed for such situation is the people only and not the one who cheat other people. Markets everyone knows is full of risks but still people fail to understand that. While everything till now was negative, yesterday I got Money Today which has carried a column where they highlighted people who have made money in this small bull run. The article served no other purpose than a bait and is making people feel bad about themselves. End result, they would now go and invest in market and then would lose a shirt in small correction. They fail to understand that the publication has to come out with something every month and it is them who have to take informed decision.

My advice, stop reading anything which makes you feel bad about yourself. Just calculate the amount of money you have to take risk and invest that portion only in stock market. It is not at all bad if stock market is rising and you ave not invested even a single Penny…….why???? because this helps you to keep the Job. Yes even if I don’t earn a single penny from market, I am happy that markets are rising because I am able to maintain my job and get regular promotions and pay increases. So, I am Happy.
Apart from this do read on excellent article on How to Get Rich The Basic Principals of Get Rich Attitude

                                                             

The Markets NSE-BSE does not look good

Markets have been on a downtrend for quite a while now. NSE after touching 3100 is now again close to its lows. More recent event again in January is satyam fraud but earnings and global cues is now taking its toll.

While we approach a long weekend its important to see how Nifty and sensex chalks out its path. It can be a down day considering people would not take a risk on long weekend.

One need to be cautious and take risk judiciously. People who want to buy for long term can also take a risk of buying considering nothing happens on this weekend and markets open up in green on 27th January.

So there is only 2 rules to follow

1. Dont take chances if you cant afford to lose any money
2. Dont ever forget the rule 1.

Good Luck and Happy Investing

                                                             

View on Nifty

WHile the near term target is 4452, the mid term target is 4500. market has ggot support at 4370 area.

4450/4500 august/july call writing for booking gains on slight fall is a good idea.                                                              

Buy Chennai Petro

Buy chennai petro @278
SL-269
Target-289                                                              

Nifty Closing was in line with expectation

Nifty closed justifying our move earlier. Next step is to short the 4450/4500 call. We would wait for nifty to rise further. The moment we see market has hit a resistence we would play our strategy.

stay tuned to this blog.                                                              

NSE to relax strike rates to pep up volumes

The below move will help us to prove our trading methodology.


MUMBAI: The National Stock Exchange (NSE) has approved a change in strike price interval of Nifty options to allow greater flexibility to derivative traders while taking a view on the index. The proposal has been cleared by capital market regulator the Securities and Exchange Board of India, and the NSE will shortly be implementing the same, an official familiar with the development told ET. Currently, the strike price interval for Nifty options is 10, and the NSE has proposed that this be increased to 50.

The exchange follows a 9-1-9 format (9 strikes of interval 10 on either sides of the previous closing level) for introducing the strike prices on Nifty options (call/put). Assume that the Nifty has closed at 4000 on Monday, under the current rule, in a rising market, a trader cannot buy a Nifty option with a strike price beyond 4090 on Tuesday, as that would be the limit on the upper side.

Similarly, on the lower side, a trader cannot buy a Nifty option with a strike price below 3910. The Nifty is now trading over 4350, and traders have been complaining for long that the 90-point limit on either side does not leave them with enough room to hedge or take a directional call in the event of a sharp move in the index.

Also, there is very little activity in strike prices, having a multiple other than 50. Data collated by ET shows that most of the options with a strike price other than multiple of 50 are either illiquid or have very little volumes.

The exchange is now planning to introduce a 6-1-6 format of strike prices with an interval of 50. This means there would be a minimum of 13 strike prices, six ‘in the money’, one ‘at the money’ and six ‘out of the money’. Those options, which have certain intrinsic value, are called ‘in the money’, by virtue of the fact that they are holding some money right now. Those options whose intrinsic value is zero are called ‘out of the money’, by virtue of the fact that they are not holding any money right now.

Once the new format is implemented, traders in Nifty options will be able to take a 300-point bet on either side of the previous day’s closing. Derivative market observers say the NSE move is expected to boost trading volumes in Nifty options, which currently account for just about 10% of the total trading volume in the derivatives segment.

Derivative traders had been asking for introduction of intra-day strike prices by the exchange as opposed to the current policy of introducing strike prices based on the previous day’s closing prices. But once the new format (6-1-6 with a 50-point interval) comes into effect, there will not be any need of intra-day strike prices, till the Nifty rises multifold from current levels.

http://economictimes.indiatimes.com/NSE_to_relax_strike_rates_to_pep_up_volumes/articleshow/2179964.cms                                                              

Nifty behaving as expected

Nifty is behaving in line with our expectation. While you have sold july 4200 put now the next strategy is to sell distant calls. By this small consolidation and downward move in nifty will help you to lock profit. keep an eye on 4450 call of july and august series. let nifty bounce a bit more before you can sell. we expect 4200 put to expire worthless and hence gain of 10%.                                                              

IPO's- Retail participation decides listing price

MUMBAI: Foreign portfolio managers and big institutions may be the movers and shakers in the market, but it’s retail investors who decide the listing price of an IPO. The strong backing of cash-rich institutional investors alone does not really guarantee a blockbuster first-day for public issues on the bourses. An ET study on 49 IPOs of this year reveals that listing prices were distinctly higher for shares where the equity offerings had a wider retail participation.

The hi-premium listing of ICRA, Global Broadcast, MIC Electronics and Vishal Retail substantiates this. While Vishal Retail listed at a 75% premium, ICRA and Global Broadcast opened at 59% and 67% premium, respectively. All the three IPOs logged a retail subscription of 58, 52 and 45 times, respectively.

So, is there any correlation between subscription and listing? “There is and there is not. The thumb rule is, if there is quality demand for subscription, the issue should see a good listing. The basic idea is that if there is unsatisfied demand, investors will continue to buy the stock when it enters the market.

The initial stock momentum of a newly-listed company is wholly dependent on retail participation,” says S Ramesh of Kotak Investment Banking. Agrees Ananta P Sarma of IDBI Capital: “If overall subscription to an issue is in the range of 1- 8 times, then there is a good possibility that the stock will dip marginally on listing. But when there is heavy over-subscription, the listing will be on a higher premium and gains would be larger.”

Though qualified institutional buyers (QIBs) have begun subscribing to every issue, it is retail investors who keep the stock up in the initial weeks of listing. Heavy subscription by retail investors help the stock to sustain its price for a longer term. While a section of the market also believes that retail investors are more stable as far as holding time of the stock is concerned, this is not necessarily true since many retail investors exit the stock on the first day. Retail investors are believed to have put in about Rs 8,000 crore into equities in June alone. Of this, about Rs 3,150 crore was invested in ICICI Bank’s follow-on public offer and about Rs 2,700 crore in DLF IPO.

At this point, one should remember that about 94% of the total IPO application money (among retail investors and HNIs) comes from 15 ‘IPO- crazy cities’.


A good article from Economic times
http://economictimes.indiatimes.com/Markets/Stocks/IPOs/Retail_participation_decides_listing_price/articleshow/2187439.cms                                                              

Consistent Money- Write Options- strategy for July

Few days Back I recommended in my blog to write/sell 4200 July Put. Nifty has big support at 4220-4205. Also the trend is up and the nifty can attempt to achieve target of 4400+. The july put is 14 days away from expiry. A cool 10% can be made from the moment i recommended it.

This is consistent money. Considering the risk involved and the return the game of probability comes into picture. Patience is the key.                                                              

Whats the best strategy for you

I am not sure how much research you guys do on your end.

You must be having tons of money with you but if you have no knowledge of how to pick stock then you are doing nothing then gambling in a casino.

the apetite to trade is so string that we cannot think of life without it. This is an ocean of fire which kills many traders everyday and the few who survive wait on sideline to make ano0ther futile attempt.

Always I talk about magic formula. Do you have one? I guess most of you who will read this post doesnt have any.ased on tiups

Lets see whats you have tried-
1) Trading on your own with no plan
2) Trading based on tips
3) Picking up knowledge from chat rooms
4) Asking from self styled gurus whoi think their predictions are unbeatable
5) Subscribing to paid calls.


In the end if you are again a loser (accept it) then this is right place for you.

This blog will tell you safer startegies to earn about 6% + every month. Put it over 4 years by investing 45,000 from start makes it huge amount in lakhs.

Think about it. This is not a paid service. I like to build a community of people who shafre knowledge and resources.
Quite seldom I would like to help you with some reports but my blog will to highlight only those issues which I think are the best to share.
http://groups.google.com/group/niftynseoptions

Chaaaooooo                                                              

'Sensex to cross 50,000 mark by 2020'

http://economictimes.indiatimes.com/Sensex_to_cross_50000_mark_by_2020/articleshow/2186378.cms
MUMBAI: Sensex hitting 50,000 is right now only a serious prediction for Morgan Stanley and a laughable target for others but believe it or not Brazil's 50 share benchmark index 'Bovespa' went past 50,000 mark in May this year.
Sensex crossing 15,000 was also unimaginable two years back but today it is a reality and very close to what former Sebi whole time member Madhukar uttered, predicting that Sensex will cross 16,000 mark also.
After acheiving this record landmark analyst feel that Sensex will cross 25,000 mark by 2010, which big bull Rakesh Jhunjhunwala predicted in 2005 only.
Another brave statement from world's leading investment bank Morgan Stanley predicts Sensex to cross 50,000 mark 12 years from now in 2020. Morgan Stanley's prediction came in February only and they still hold on to what they predicted earlier.
"You just need to factor in India's GDP growth of 8 per cent along with an inflation of 5-6 per cent and the cost of manufacturing and assuming Sensex stocks will grow by 17-18 per cent till 2020, then it will work out to more than what Morgan Stanley has predicted," Angel Broking's CMD, Dinesh Thakkar said.
Also, the Sensex crossing 50,000 mark is in the realm of possibility with Brazil's Sao Paulo Stock Exchange's benchmark index Bovespa hitting 50,000 mark first time ever on May 3 and closing around 55,000 mark last week.
The landmark on the Indian bourses that will now be keenly awaited is NSE Nifty's 5,000 mark which is just 614 points from yesterday's close at 4,384 points.
Sensex with yesterday's close at 14,964 is yet to record its first ever close above 15,000 mark, and when it does it will join an exclusive club of world bourses that currently trade above 15,000.
Besides Bovespa, on Friday Japanese index Nikkei closed at 18,140 and Hong Kong's index Hang Seng closed at 22,000 level.
There are 50 companies listed in the blue-chip Bovespa stock index as compared to 30 companies on the Sensex.
Brazil is a mirror image of India in terms of natural resources and also it has largest number of people living in poverty in all of Latin America.
Still, Brazil's arrival as a global economic power is linked to its vast natural resources like iron ore, offshore oil fields and the country's extensive use of ethanol.
Brazil has also become self-sufficient in energy, ending decades of foreign oil imports.
Like India, Brazil's economy is linked to agriculture, and it's the world's largest exporter of coffee, sugar, cattle, orange juice, and has surpassed the US as the biggest exporter of soybeans in January 2006.
"Sensex is in exuberance right now and it will continue for next few months," Thakkar says.
Meanwhile analysts believe that Bovespa may hit 60,000 mark by end of 2007.                                                              

Reports Round UP

Top Pick
Reliance, Grasim, BHEL, Reliance Communication, Ranbaxy.

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Sectors with accelerating growth: Power and Pharma Indian
Sectors with sustained momentum in growth: Engineering & Capital Goods and Cement and Construction
Sectors with decelerating growth: Sugar & Textiles

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A bug fund house has set a target of 16000 for december-07 and Dec-08 Sensex target of 17,500-18,400.                                                              

Nifty Weekly

Comment by one expert-

Nifty made a record high at 4411 last week. But the three dojis in the daily chart of the Nifty last week suitably reflect the tussle between the bulls and bears at this point. As explained last week, the zone between 4350 and 4400 is a potent resistance that can cause a medium term reversal. Though the Nifty can move higher to 4434 or even 4480 next week, we continue to advocate caution with long positions. However, fresh shorts are also not advised until there is a close below 4211. Supports for the week would be at 4293 and then at 4220.                                                              

Nifty has support base at 4300. Buy India Cement

Nifty Support is at 4300. Target 4400+. Important level is 4341. If market sustains above this level than it will consolidate to run high.

Best strategy is to sell out of money puts.

Buy India Cement. Target227 and SL of 212. buy at around 220-221                                                              

Infosys ADR (INFY)

Hi Folks,

Curious about infosys. Its ADR has been rated by big analysts. See the snapshot below. All made in May after that no one has said anything

04/17/07 Infosys Technologies "hold" Stifel Nicolaus
04/17/07 Infosys Technologies "buy" UBS
04/14/07 Infosys Technologies "buy" Janney Montgomery Scott
04/11/07 Infosys Technologies initiated with "market perform" Piper Jaffray
04/11/07 Infosys Technologies Limited upgraded to "buy" Goldman Sachs
04/11/07 Infosys Technologies "hold," estimates reduced Stifel Nicolaus


Results are near. Indian alanysts have come out with good reports including Kotak. Also JP Morgan as of today has not revised its target of 2500+ for this year end. So does that mean we are looking for sharp increase?
Keep looking at this page                                                              

I sold 4200 July Put

My target for this month is 6% and this sell will help me achieve that. Why 4200? Only for reason that I see nifty struggling to get past 4400 in this month and with every fall it will rise with vigour. Time element will erode the value of Put.

This is for this month. Next I would start to share my experience with world of stock market where millions of small investors gets eroded from market. The whole point is to stay long in game ,..........................I am doing that wihtout worrying about profits

A small profit is better than out of market for rest of my life.                                                              

So what is the Magic Formula in Stock Markets

I am not sure and infact I am tired of trying some of them. Maybe you have large pool of money so that you can buy tons of stocks and keep buying and selling them. I hate the jargon of analyst on CNBC and NDTV who keeps on saying to buy on dips on almost every stock. I am not a mutual fund and neither I am wealthy individual. I have a limited sum and infact small loss do hurt me a lot.

While in my future blogs I would share how nothing works but the main important thing which I would like to tell you now is that I do trust the magic formula inspite of lots of losses which I have suffered in last year or so.

Intention of this blog is to put everything in this blog as I plan to start my journey. I am left with 15% of my capital and now my target is to make 500% of my original money in next 75 to 100 months. Too long for you but not for me because there are three things which I am going to look at now
1) How to stay longer in markets
2) How to preserve my capital
3) How to make profits
(This is from one of book whose name at this point i cannot recall).

If you are dejected from markets and left with little capital then this blog will help you. I am determined to make small %age of money every month to reach my goal.

In my next blogs I'll share the strategy. Infact I will use this blog to develop one.

the ideas are my own and anyone who trades on it will do at his own risk. I am going to move in a path but then if you have to move along you are responsible for your actions.

My path would be based on above 3 points. Lets see how it spans out.