How Market Traps

Suppose there is a share A which has 1crore share in the market and its value is INR 100.

Its Capitalization will be INR 1crore*100.

It suddenly starts increasing. It hits circuits on circuits and it reaches to INR 250. Say it takes 15 days to reach INR 250.

Then its capitalization will become 1crore*250.

Now think why there is so much money inflow in this particular stock. Because all retailers cannot invest in the same stock . Everyone has its own choice of share.

It implies that there is some big shots are investing in that stock. So stay away from that stock. Because the day they start taking their money back from that stock it might come to INR 70-80. Your money will be one third of your investment.

E.g. there is company named Thinksoft . its share rose 100 to 550 in no time. And suddenly came down to 110 levels. The people who bought that stock at 500 or above, they are still stuck in that stock and cursing their luck and share market.

Stay away from those stocks which is continuously going up, it might come down any time. By the time you will realize that you might be trapped in that stock.

Same thing happened in January 2008. FII’s were continuously buying in Indian and market suddenly went 10% up. They got all the retail Investors invested. And took out their money and we know the result what happened afterwards.

The conclusion is:

When market goes up suddenly its time for you to be cautious.