thank u for all ur help:)

i don knw how 2 pik d company to watch b4 investing

becoz so many companies there:)\

plz tell me hw 2 choose? 

plz tel me how money depreciates affect share market??? share price??

explain difference between bse stock and nse stock?

i don understnd d concept clearly how sens*x and nifty affects the share price??

tel me how us market,europ market related to indian market???

Okay, that's a whole lotta queries!

One by one.

1. Sens*x

See the sens*x or Sensitive Index and Nifty-50 are based on the same principle. Top 30 stocks are chosen giving weightage to each sector on earnings and their float in the market, i.e.,equity held by general public v/s promoters.

The market cap of each stock is compared against the market cap of the Sens*x to give them a weightage, usually high for stocks such as Reliance, ITC, HUL, Tata Steel etc. Then every second as the prices change the mkt cap changes leading to the Sens*x adding or losing percentage points.

Hence, when prices go down the Sens*x/Nifty goes down, and when the Sens*x and Nifty continues to fall, market sentiment is hurt, investors lose confidence and sell leading to further fall. A chain effect is seen.

The stock market IS the country. It reflects the state of the economy, the ease of raising capital, the transparency and liquidity in the system, ie., How we are doing as a country, How cheaply can long term funds be raised, What is the level of credibility of Indian Companies and How easy/difficult is it for foreigners and large investors to pull out money from the market.

2. Depreciation / Inflation

Now, rupee depreciation occurs against a certain currency when rupee is sold against the currency, i.e, say, Rupee is sold and Dollars are bought . Why does this happen?

This happens in 2 scenarios. The first isnt much of a game changer, that's when Foreign Institutional Investors take their profits by selling in the Stock market, converting it to Dollars and taking it back to their home country for short periods. This is a small amount that doesnt hurt the currency and this money shall come back someday.

The second reason is the problematic phenomenon. When the market underperforms compared to Global markets, the fund managers sell their Indian scrips, and convert it to Dollars and invest at home or other Countries. This creates a tremendous pressure on the rupee as more and more people join in the selling, and Currency traders cash in on the weakness and sell rupee further.

Along with the stock market, even inflation adds to the woes as more and more rupee is required to buy each article. Remember what they say, "twice the number of Dollars in the market will still be worth the same", meaning, by printing currency, the excess liquidity causes further falls in the home currency.With inflation rising, with each article costing more, with the depreciation in rupee, the Inflation will be much more than expected now, causing further panic. Importers are hurt the most as they have to shell out more rupee every time, meaning they sell rupee constantly at higher rates leading to further declines. Government's Oil bill goes on the rise due to higher payments made on account of Oil imports.

The only silver lining is for exporters and especially IT ompanies, who receive a larger rupee payout when they exchange their dollar recipts.

3. Europe burning?

When a person discloses to his creditors his possibility of not being able to return borrowed funds, the risk of Default is high. In case he fails to return the loan, he is sued and his assets attached.

Now, what do you do when a large MNC bank does the same? Worse, what do you do when a country is about to default on its Govt bonds?

This is what has happened across Europe. Greece, Italy, Portugal, Ireland, Spain and the list goes on! Being a developed country means consisting of a large number of senior citizens, paying for healthcare and pension, without the requisite amount of growth in Govt earnings. This leads to a situation where the country needs to borrow money, but as soon as it approaches other countries or Foreign banks they are averse to lending them seeing the situation in the developed nation. They are left with no other option than to offer bonds at very high rates. For instance, when a strong economy such as Germany offers, say, 5 % on its bonds, the other developed nations who desperately need the money offer 6/7/8 percent to seize the free cash float.

In a few years time, with the added high debt payments coupled with rising population costs, these countries slide towards default. We have all seen the fall of Baer Stearns and Lehmann Bros, now imagine the effect of Greece/Spain collapsing. The human tragedy alone will take the whole of Europe down with it.

But this isnt just a European problem. The EU, European Union is a major trading partner in every country's books. The risk of payments being withheld due to bankrupt companies or exchange restrictions is severe, and more severe is the situation of the bonds you're holding in a collapsed economy being worth nothing. Junk Bonds. Billions of dollars of worthless paper.

As the default risk rises, markets panic. Foreign investors and long term domestic investors pull out leading to astronomical falls. In order to reduce losses from Europe, the FIIs sell in the Emerging markets such as India, Brazil, Korea leading to a domino effect that lasts for days.

4. Where to invest? How to invest?

Presently, investing in the indian stock market is like catching a falling knife. Unless you're adept at shorting the stocks and covering your investment you might end up losing as much as 20% in the short run.

As I write this, the market is 413 points down, at 15652, at 1:18 pm on 23rd November. Only God knows where this will be, say, in 3 months. Many pundits will argue, that from 21000 peak the sens*x has lost 20%. Trust me, the case is not the same for Individual stocks. Ask anyone who has been watching the market for the last 5 years, and he'll tell you that prices reflect a sens*x at 10,000 not 15,000. Due the current selection of stocks in the sens*x, a false reflection is seen of the actual state of our listed companies.

Holy Cows such as RIL, State Bank, HDFC/HDFC Bank, Larsen and Toubro are all a shadow of their former selves. As companies, their performance hasnt waned, they are growing faster than their foreign peers, but with added cost of raw materials due to rising commodity prices, rising employee costs, declining rupee, their performances have slowed down leading to a loss in confidence. one could argue in their favour that they are still Fortune 500 cos, but when it comes to valuing them, market is king - 'bhau bhagwan che', as they say...

For those who feel their investment can be forgotten for atleast 2 years, do Invest. I suggest you stick to mutual funds, using a monthly investment scheme called SIP to get in to the market. Unless you have spent atleast a month watching CNBCTV18 / Bloomberg UTV / TimesNOW, a month, I repeat, do not venture directly via a demat account, and even then, invest little by little, 1000 by 1000.

Remember, the value of  your money cant go down sitting in your savings account, nor can you make losses. Opportunities will come by to all those who wait.

AS says by WARAN BAFET " If you want to invest in particular comany's security, please write at least one page about that comany' if you can then go ahed. AS being student of finance and Law everyone should invest in market to know the stock market. you surely get more knowledge for the concept portfolio, derivatives, mutualfund, ratio analysis, etc. www.Monycontrol.com is good source to learn about market..

Humans have a natural tendency to follow the crowd, but when it comes to stock market investing, following the crowd can often result in losses. Why replicate the mediocrity of the masses when you can clone the success of the World’s Greatest Investor?
The investment secrets of warren buffet have got unveiled here.

https://holisticinvestment.in/7-secrets-of-winning

Regards,

Ramalingam K, MBA, CFP,

Chief Financial Planner,

Holistic Investment planner private Limited,

Www.holisticinvestment.in

Humans have a natural tendency to follow the crowd, but when it comes to stock market investing, following the crowd can often result in losses. Why replicate the mediocrity of the masses when you can clone the success of the World’s Greatest Investor?
The investment secrets of warren buffet have got unveiled here.

https://holisticinvestment.in/7-secrets-of-winning

Regards,

Ramalingam K, MBA, CFP,

Chief Financial Planner,

Holistic Investment planner private Limited,

Www.holisticinvestment.in

Hello There..

Thank you for very informative infos on starting to invest money in Forex.. I hope you can send more pointers to the newbies like me in starting to invest money in stock market. Thank you!