Indian Stock Market

Indian Share market is known for the volatility and this only makes it the place for interest of masses. The movement in the market is due to several reasons it can be the result of economic variations or crisis, ups and downs in the political scenario, relationship of India with other neighboring countries or may be due to some natural disaster that has shook the world. Our stock market works under the rules and regulations of SEBI that is securities and exchange board of India.

There are various guidelines and rules and regulations being formed by SEBI which are regulated in order to protect the rights of the investors. The directives of SEBI are very effective as they help in promoting and regulating the stock market. There are two stock exchanges in Indian stock market which are NSE and BSE. National Stock Exchange includes all the blue chip companies which are known as large caps. Bombay Stock Exchange is also known as the SENSEX which means sensitive index, and include about 30companies in 1986 but with the consistent performance it has jumped to about 4000 by 1992. Both the stock exchange has their headquarters in Bombay.

Indian share market is considered to be the safest place for investment as it is becoming the most demanding market nowadays. It has all the substance to encounter the factors responsible for financial crisis. Indian share market deals with a variety of shares that are considered to be the potential shares from the trading point of view. The market include blue chip companies or organizations which are having regular growth record and work with the huge amount of capital for paying off the dividends.

Indian Share Market also includes defensive stocks which are considered to be the best running stock amongst all the stocks. These stocks have the prices which are stable even in the conditions of recession. Thus avoid the risk of less liquidity.

Due to so many advantages of Indian Share Market people are getting attracted towards investment in it. There are people who invest daily in share market and making good money by analyzing the market through various software and analysis techniques. The market is divided into Equity and Commodity market. This also includes Future and options. There are various myths that are related to Share Market but all these are things that should not be followed but instead those who are investing the market should go through the deep analysis or should take the help of experts or of some the advisory companies who are working in this direction.

What is stop loss in trading

Stop Loss is a buy or sell order which gets triggered automatically, once the stock reaches a certain price. The aim here is to limit the loss on a security (buy or sell) position.

A stop order to sell becomes a market order when the item is offered at or below the specified price. E.g.: If you have bought 1 share of RIL at Rs. 1,050, you will enter stoploss order at a price below Rs. 1,050, say Rs. 1,020. If RIL share price falls to Rs. 1,020, a sell stoploss order will get triggered, which limits your loss on account of purchase to Rs. 30. 

Similarly, a stop order to buy becomes a market order when the item is bid at or above the specified price. E.g.: If you have short-sold 1 share of RIL at Rs. 1,050, you will enter stoploss order at a price above Rs. 1,050, say Rs. 1,070. If RIL share price rises to Rs. 1,070, a buy stoploss order will get triggered, which will limit your loss on account of sale to Rs. 20. 

There are no set rules for stop loss orders. Traders deploy very tight stop loss orders, while investors may not need it also. Advantage of stop loss is it avoids the need for constant monitoring of share price. Its disadvantage is that short-term price fluctuations could trigger stop loss orders very frequently. Also, setting very narrow stop loss for shares historically having wide price fluctuations could lead to unnecessary triggers of stop loss. 

E.g.: If you bought 1 share of RIL at Rs. 1050 with stoploss of Rs. 1020. This means that if the stock falls below 1020, your stoploss order will automatically become a market order and share will be sold at the then prevailing market price, not necessarily the stop loss price. Thus setting a stoploss order below the purchase price will limit the loss, but in a very fast-moving market, losses may be higher than expected.

source : internet