Market Trend Explained by IntraDayTips

The Tendency of Indian Financial market i.e Stock Market to move in a specific direction is termed as Market trend in stock market. Trends can vary in length from short, to intermediate, to long term. If you can identify a trend, it can be highly profitable, because you will be able to trade with the trend. 

The terms bull stock market and bear stock market shows us upward and downward market trends, respectively, they describe either the share market or specific sectors like steel and cement, auto are showing up trend, down trend or sideways.

Traders can identify the market trend using technical analysis.   

This Market trends are classified in to Secular trend, Primary trend, and Secondary trend.

Secular Trend
A Secular trend is a long term trend that can last for 5 to 20 years. In the Secular Bull trend we see larger bull market and smaller bear market. In the trend Market remains bullish and moves upwards, over a longer time. While in the case of Secular Bear Market the cash is completely opposite, here we seen long lasting bear market and small bull market for very short duration. The market remains bearish and move downwards.

Primary Trend:

The Market which moves in totality, i.e. All the sectors or maximum sectors are moving in one direction for a period of year or more is termed as Primary trend. This primary trend can be further classified in to Bull Market and Bear Market. In Bull market confidence of investors grows and the economy shows clear signs of recovery and development. In India Stock Exchange showed a bull market trend from April 2003 till Jan 2008. Sensex rose from 2900 levels to 21,000 levels in these five years. In Bear market investor lose their confidence and move away from the share market. Prices of stocks fall by 20% or more over two to three month duration.

Secondary Trend

This are short term changes in the price direction and usually last for few weeks for few month. Market correction after making a high is also termed as Secondary trend. Here the market correct by 5-10% in few days or few weeks and again start moving up. Sometimes we see Bear Market rally, in this rally market moves 10%-15% up than the prevailing prices and after some time again comes to same level. This bear market rally is also called as Secondary Trend.

Market Trend analysis if done properly, you can predict a trend like a bull market run and ride that trend until data suggests a trend reversal. Trend analysis is helpful because moving with trends, will lead to profit for an investor. 

 

Market trend can also be classified in three ways up trend, down trend and sideway trend.

Up Trend : When market moves up, gradually for a longer duration, you can term that market trend has up trend. The stock or index is moving up, making new highs or higher highs

Down Trend: When markets starts falling and it falls by 15%-20% you can termed the market trend as down trend. The stock or index is moving downwards making lower lows

Sideway Trend:  If market neither moves up nor moves down, is termed as sideway’s trend.  Markets neither making significant new highs nor new lows.

If you have the right knowledge of tracking the market trend and also the trend reversal at the right time, you are the one who can earn lot of money from the share market.

Investment Planning Simplified for Indian investors

Our Technical Experts who track NSE stock market  every second by second  say’s that Investment planning is very simple and its more rewarding for Indian investors than they  would  have imagine earlier some years back. So if you plan it properly you are sure to achieve the targets set by you in the future.

To Start Investing your age and investment amount does not matter, but if you start at early age with big amount then, your outcome i.e returns from that investment will be huge. Also we don’t think that you should have lot of technical information before you start investing in Indian Markets. 

We can divide investments planning in Three Steps

1)      Decide your Long term financial goals
Since Normally people do investment is a for some long term expenses, first you need to think about those long terms goals. So Before you start with actual investing, Ask yourself, What are your  goals?   Why are you saving money?  Do you plan to buy  A house?, To Buy Bigger House or in a Good Locality?  Are you savings for Child's Future education/ marriage?  Do you plan to Buy New car? Do you want to go for World tour? Is this investment for your Retirement life?

Once you finalize the details,  Prepare a details chart of this things,

Chart Example

We have given a simple Financial Goal Chart Prepared for Mr. Sandeep Kumar a  IT Expert working in Tech Mahindra age 25 years, having a salary of 50,000/- per month  

	Amount	Time Horizon
Marriage	3,00,000	2 years
Child Education	10,00,000	15 years
Upgrading from 1 BHK to 2 BHK Flat	10,00,000	5 Years
World Tour	6,00,000	5 Years
Child Marriage	5,00,000	25 Years
Retirement Fund	25,00,000	35  years

2)      Calculate your risk profile
First describe your risk profile, you can be aggressive investor, a conservative investor or somewhere in the middle Depending on our income and needs, we all have different capacity for risk. At the Age of 21, you can take more risk with your investments but at the age of 50, your profile of risk taking turns to very cautious and safe.  We also have a different risk tolerance, based on our individual psychological make-up. Understand your risk profile and plan your portfolio accordingly. Depending on your Risk Profile Investment options can be Bank Deposits, Life Insurance, Investment Linked Funds, Bonds / Debentures / Company Fixed Deposits, Investments in Shares, Investments in Business, Investments in Property.  The amount of risk you are willing to take plays a big role in how your portfolio will be allocated. Working with your financial professional, you can determine your comfort level with investment risk

3)       Planning your asset allocation for Investment
If you have a long period of time (10 or more years) to reach a goal, you may want to choose investments with greater growth potential with some risk attached to it. So Investment in Shares / Debentures, Investment linked funds, Investments in Property, Gold can be options for your asset allocation for your investments.  But if suppose you have less than five years to reach a goal, you may prefer investments that protect your investments and are safe with less returns but sure returns. So Options like Bank Deposits, Company Deposits, Fixed Deposits are the options that you can look forward to invest your money.  

So Investment Planning can be summarize as to first finalizing your investment s goals with time limit, calculate your risk profile, and depending on that, make your investments in available options.

What is Auction and When it happens in NSE Share Market

What is Aution in Nse Share Market ?

Action happens only in Intraday trading in Cash Segment of Indian Nse Stock Market. If any intraday trader thinks that there a bearish trend in the stockmarket and  shorts sells  the shares, but due to any eventuality he forget to buy back the sold shares, before the stockmarket closes. When any trader shorts sells any stock, same time a some other traders  at the other side, buy’s those shares. Brokers  has to give Delivery of this short sold shares in Demat Form to Buyer who has brought those shares.

Generally  short sell intraday traders can’t buyback the sold stocks, when stock hits the  upper circuits. We do not advise, short sell in low volume stocks, penny stocks  and those stocks which are not available in F&o Segment.

Sometimes, intraday traders trade in BTST Call (Buy Today Sell Tomorrow)  i.e.  Intraday Shares Mr. Narendra Kumar Buy 100 Shares  of Blue Dart and Sells same shares in Next Day’s Trading Session, there are chances that this shares may also go for auction in Nse Share market.

Action doesn’t happen in Fno Segment of Share Market because you carry forward the short position till the end of month in f&o segment . So your stocks will never go for auction  in Nse Fno Segment. Auction normally happens only in cash segment of stock Market. If any intraday trader have sold the stock in the nse market and in any circumstances he is not able to provide the delivery in time  in demat form the said sold stock will also go for auction in that market. 

If a Intraday Traders Mr. Rahul Kumar Shorts Sells  100 Shares of Reliance Industries Ltd @ 900 Rs on 9 April 2012 at  09:45 am and he forgets to buy back the same short sold shares of Reliance Industries Ltd by 03:30 pm i.e is the closing market time, the said Reliance Industries Shares shares will go for auction.

How Auction Happens in Stock Market

Only Register Brokers participate in Auction process, If the Auction is successful for buying stocks, brokers has to pay actual action rate, penalty plus whatever the broker’s brokerage charges for that trade. 

If the Auction is not successful, and broker is not able to buy this stock due any reason like stock hits continuously upper circuits in stock market. In this case short sell transaction will be cancelled by the nse stock  exchange and short sold trader has to pay the highest price the stock achieved during the day  but not more than 20% of the opening price of the prior auction day.

If under a circumstances the short sold shares goes down in T+3 on Auction day, Short sellers will not get any benefit or profits from the low price of the stock or rate has gone down for the said stocks.

Generally Auction happens in nse share market in Strong Bullish Trend. It also happens in low volume stocks, penny stocks and stocks that run on rumours in the stock market.

What is the meaning of Rollover in NSE Share Market

Nse Traders can trade in index Futures on NSE or stock futures in Nse Stock Market

Futures and options represent two of the most common form of "Derivatives" in Nse Share Market . Derivatives are financial instruments that derive their value from an 'underlying'. The underlying is a stock issued by a company, The derivative instrument can be traded independently of the underlying asset. For Example Reliance Futures Derives its rates from Reliance stock.

The value of the derivative instrument changes according to the changes in the value of the underlying i.e value of that stock.

 

Rollover means carry forwarding a position in derivative (f&0) segment. The buy position  or sell Position that  you have taken in current near futures ( current f & o segment  ) will be squared off at the end of the current near futures  and you take the new fresh position in the same Stock Futures in mid month next f&o segment is called Roll over in Nse ( National stock Exchange )  Share Market.

Generally Roll over happens at end of the month (Near f&o segment expiry) and Rollover depend upon the Nse stock market trend if the Nse share market is bullish (tejI)  roll over mostly done in buying side and if the stock market trend is bearish ( Mandi) Rollover is done at selling side.

Rollover is possible only in Derivative segment (Future & Option Trading) of Nse share market also known as a F&O segment in NSE(National Stock Exchange).

Nse traders should understand that You can't roll over in Nse cash ( Equity cash )  segment. Rollover happens only and only in Nse Future & option Trading (f&o segment )

Nifty futures contracts have a maximum of 3-month trading cycle - the near month (one), the next month (two) and the far month (three). A new contract is introduced on the trading day following the expiry of the near month contract. The new contract will be introduced for three month duration. This way, at any point in time, there will be 3 contracts available for trading in the market i.e., one near month, one mid month and one far month duration respectively.

Future contracts For Three Month Duration.

1) Near month (current Future & option segment)

2) Mid month (Next month Future & option segment)

3) Far Month.

Period of  future & option Contract

Generally the end date of f&o (Future & option contract ) Segment  is last THURSDAY of the month and new future & option contract date  starts immediately on preceding Friday.

Ie.  New future & option contract starts on Friday immediately on expiry of the contract on Thursday.

Example  of  F&O  Segment contract Period

If the Near Month Future & options contract start  in the month of February 2014.

The  start date is  31^st  January 2014  ( Friday ) & Contract will expire by 26^th  February   2014  Wednesday .  Generally Future & Option contract expires on last Thursday of that month but if the last Thursday is a holiday, the contract will expire one day before i.e. Wednesday

Same way the Next month Future & option contract (Mid Month Future & option contract) will start by 28^th February 2014  ( Friday ) and will expire by 27^th March 2014  ( Thursday).  It’s called March f&o Segment 2014.

And the Far Month contract will  start by 28^th March 2014 ( Friday ) expire by 24^th april 2014 ( Thursday) Its known as  April  f&o  Segment  2014.

Nse Future Contract always expire’s on last Thursday of every month & it start new future immediately on Friday.

Roll Over Example

We advised you to read the example of Rollover which will give you complete idea and solved your all doubts on doing rollover in fno segment. (Current / Near month – Feb 14,  Mid / Next month  March 14, Far Month April 14.

Mr. Rakesh kumar an Intraday Traders holds positions in TCS (Stock Futures) having a lot size of 125 @ 2150 in Feb Segment i.e Current FNO Segment.  He is Bullish in the stock and wants to carry forward his positions to mid month or next month to make more profit.  He will roll over his positions to next month.  If the Price prevailing in the Next Month is Rs 2160/- Mr. Rakesh Kumar will have to pay premium of Rs 10 for doing Rollover in NSE Segment.