All About Stocks

BTST is buy today sell tomorrow. Take any share and look at the last day’s close and today’s open rate. They are not same. BTST works on this rate difference. You buy the share today at closing time (i.e. just before 3:30 pm) sell it on higher rate the next day as soon as market opens(i.e just after 9:15 am). This is pretty effective way to earn money from market because when market is closed no Big shot can play game on the stock as they do in market hours.

Open interest is the total number of futures contracts or option contracts that have not yet been exercised (squared off), expired, or fulfilled by delivery. Price Open Interest Interpretation Rising Rising Stock is Strong Rising Falling Stock is Weakening Falling Rising Stock is Weak Falling Falling Stock is Strengthening

Check out the end of the data daily. How many shares have gone up, how many has come down and how many shares have not changed. This will give you a brief idea about market. Suppose market has gone up 2% but only 20% companies has gone up and rest of the companies are either negative or flat (this is when FII’s buying). Normal psychology of market is if market is going up then most of the shares listed in exchange will go up (this is when retailer buys). In September’10 FII’s bought a lot and increased the market to 10% in a month. In October’10 they started selling the stocks but kept buying the index future to keep the retailer invested. And in November’10 they started selling the index future also. Now market has started falling. Till when market will fall nobody knows. FII’s has created the same situation as January’08 and people are so dumb that they have faced the recession recently still then they are not able to understand what big people are doing. GOD BLESS ...

It is a fix profit situation. When you do arbitrage you fix your profit irrespective of stock movement. E.g. you have delivery of Stock A. Rate of that stock at NSE is 100 and at BSE is 102. Short sell it on BSE and Buy it on NSE. You have your Stock at got the profit. As soon the rate on both the exchanges gets equal, square off both the positions. (Suppose you square off your position at 95. Profit in short selling INR 7 and loss in Buying INR 5. Net Profit INR 2 . Suppose you square off your position at 105. Loss in short selling INR 3 and profit in Buying INR 5. Net Profit INR 2 .) Arbitrage can have plenty of possibilities. It’s up to you how many possibilities you can think about. I have just mentioned one.

Suppose you have INR 100 in your D-mat account, you can buy up to INR 500 for intraday. 5 times intraday margin is standard for every broking firm (it may vary from company to company). (Why 5 times? Because stocks have their circuit breaker at 20% ) When you buy shares for INR 500, INR 400 is paid by the broker. That’s why margin is given only for intraday. It is given for generating more and more brokerage. When you buy a share for 100Rs. Its your share, you can sell it whenever want you want to sell it. When you buy shares for 500Rs, you have to book profit or loss for the same day. That’s how people get loss from the market. And they curse market. Don’t trade on margins. Trade in your limits.

They say if you have bought share in NSE you cannot sell it on BSE. This is partially true. If you have bought share on NSE you cannot sell that share on BSE on the same day. If you have the delivery you can sell it wherever you want. There is no extra charge for this. So if you are selling the delivery sell on that exchange on which the rate is higher. You will easily get 10-15 paisa difference between NSE and BSE prices.

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 wh...