Chart Analysis in Stock Market

• Chart analysis is the technique of using patterns formed on a chart to get an idea about the price movement of a share.
• There are two types of chart patterns: reversal and continuation.
• A continuation pattern suggests that the prior trend will continue upon completion of the pattern.
• A reversal pattern suggests that the prior trend will reverse upon completion of the pattern.

L&T Ltd - Safe Stock to Invest

The company is well poised to capitalise on the upcoming business opportunities, particularly in the infrastructure, power and defence sectors, which are likely to benefit from the government's thrust.

The management expects about Rs 150000 crore of orders in the next couple of quarters to come for bidding. These include orders from airports, metros, dedicated freight corridors, urban infrastructure, power generation, including nuclear power plants, T&D, etc. 

Larsen & Tourbo

BSE: 500510 | NSE: LT | ISIN: INE018A01030 | SECTOR: INFRASTRUCTURE - GENERAL

Target Price: 2123

Share Market Ka Funda: Types of Price GAPs

 

Common gaps: Common gaps are ‘common’ and ‘uneventful’. If a Gap is formed when the markets are moving in a narrow range, it is called a Common Gap.

Breakaway Gaps: A “breakaway” gap ends a consolidation pattern and happens as prices break out. Often, they would be accompanied by huge volumes. Break-out Gaps are generally not filled for a long time, i.e. in the case of an uptrend, the price does not fall back to wipe off the gains. They may be filled as and when the prices retrace after a substantial up move. If the breakout happens to be a downtrend, the prices may not rise soon to wipe off the loss.

Runaway Gaps:Runaway gaps are best described as gaps that are caused by increased interest in the stock. For runaway gaps to the upside, it usually represents traders who did not get in during the initial move of the up trend and while waiting for a retracement in price, decided it was not going to happen. Increased buying interest happens all of a sudden, and the price gaps above the previous day’s close. This type of runaway gap represents an almost panic state in traders. Also, a good uptrend can have runaway gaps caused by significant news events that cause new interest in the stock. Runaway gaps can also happen in downtrends. This usually represents increased liquidation of that stock by traders and buyers who are standing on the sidelines. These can become very serious as those who are holding onto the stock will eventually panic and sell – but sell to whom? The price has to continue to drop and gap down to find buyers. So, in either case, runaway gaps form as a result of panic trading.

Exhaustion Gap: An “exhaustion” gap occurs at the end of a price move. If there have been two or more gaps before it, then this kind of gap should be regarded very skeptically. A genuine “exhaustion” gap is filled within a few days to a week. It is generally not easy to distinguish between the Runaway and Exhaustion Gaps. Experience in reading charts will help in due course. The best clue available is that Exhaustion Gaps are not the first Gaps in the chart, i.e. they follow the Runaway Gaps and usually occur when the runaway Gap is nearing completion. Exhaustion Gaps do not indicate whether the trend will reverse, they only call for a halt in the price movement.

   

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Share Market Timings

Trading on the Indian equities segment takes place on all weekdays. There is No trading on Saturday, Sunday and Published Indian Stock Market Holidays declared by the Indian Stock Exchange in advance.

• The Market Opens at: 09:15 hours and Closes at: 15:30 hours
• Pre open trade session will be from 09:00 ~ 09:15 hours

Pre-open trade session is a 15 minute trade session from 9:00AM to 9:15AM on the 50 stocks of NIFTY index .
Only 50 stocks of the NIFTY index can be traded during this time on both NSE and BSE. Normal trading for all other stocks will start at 9:15AM till 3:30PM.

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Why Invest in Stock Market?

Stock markets is the only place where you can start creating wealth with a little money. All it requires is a bit of discipline, average intelligence and good temperament. Any other form of investments like real estate, gold are not strictly regulated like stocks and they may also require substantial capital investment. Although in reality people have made more money by investing in assets like real estate and the stock market still remains infamous for destroying common man’s wealth. People with bad temperament and emotional attachment generally fail in stock markets.
The reason for this is that, profitable investing in stock requires proper financial knowledge and a cool mental attitude.So choosing right Stocks is most important. There will be many choices available & it is not an easy task to select few out of them. Depending on the type and nature of investment you choose, there are varying degrees of risk associated with it. And risk is part and parcel of all type of investments and success of any investment you’ve made depends on how well you have managed the risk part of it.

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Large Cap Stocks

Stocks of the largest companies in the market such as Tata, Reliance, ICICI are classified as large-cap stocks. Being established enterprises, they have at their disposal large reserves of cash to exploit new business opportunities. The sheer volume of large-cap stocks does not let them grow as rapidly as smaller capitalized companies and the smaller stocks tend to outperform them over time. Investors, however gain the advantages of reaping relatively higher dividends compared to small- and mid-cap stocks while also ensuring the long-term preservation of their capital.

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Mid-Cap Stocks

Mid-cap stocks are typically stocks of medium-sized companies. These are stocks of well-known companies, recognized as seasoned players in the market. They offer you the double advantages of acquiring stocks with good growth potential as well as the stability of a larger company. Generally companies that have a market Capitalization in the range of 250-4000 crores are mid cap stocks

Mid-cap stocks also include companies that show steady growth backed by a good track record. They are like blue-chip stocks (which are large-cap stocks) but lack the size of those companies. These stocks tend to grow well over the long term.

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Small Cap Stocks

The stocks of small companies that have the potential to grow rapidly are classified as small-cap stocks. These stocks are the best option for an investor who wishes to generate significant gains in the long run; as long he does not require current dividends and can withstand price volatility. Generally companies that have a market Capitalization in the range of up to 250 Corores are small cap stocks.

These companies are relatively new. It is difficult to predict how they will perform in the market. Being small enterprises, growth spurts dramatically affect their values and revenues, sending prices soaring.
On the other hand, the stocks of these companies tend to be volatile and may decline dramatically.

Most Initial Public Offerings (IPO) are for small-cap companies. Aggressive mutual funds are also enthusiastic about adding small-cap stocks in their portfolios. Because they have the advantage of being highly growth oriented, small-cap stocks can forego paying dividends to investors, which enables the profits earned to be reinvested for future growth.

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Stock Charts

Stock charts gained popularity in the late 19th Century from the writings of Charles H. Dow in the Wall Street Journal. His comments, later known as "Dow Theory". His theory says that markets move in all kinds of measurable trends and that these trends could be deciphered and predicted in the price movement seen on all charts.

A stock chart is a simple two-axis (x-y) plotted graph of price and time. Each individual equity, market and index listed on a public exchange has a chart that illustrates this movement of price over time. Individual data plots for charts can be made using the CLOSING price for each day. The plots are connected together in a single line, creating the graph. Also, a combination of the OPENING, CLOSING, HIGH and/or LOW prices for that market session can be used for the data plots. This second type of data is called a PRICE BAR. Individual price bars are then overlaid onto the graph, creating a dense visual display of stock movement.

Stock charts can be drawn in two different ways. An ARITHMETIC chart has equal vertical distances between each unit of price. A LOGARITHMIC chart is a percentage growth chart. It has equal vertical distances between the same percentages of price growth. For example, a price movement from 10 to 20 is a 100% move. A move from 20 to 40 is also a 100% move. For this reason, the vertical distance from 10 to 20 and the vertical distance from 20 to 40 will be identical on a logarithmic chart.

Stock chart analysis can be applied equally to individual stocks and major indices. Analysts use their technical research on index charts to decide whether the current market is a BULL MARKET or a BEAR MARKET. On individual charts, investors and traders can learn the same thing about their favorite companies.

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What is Stock Exchange?

Stock Exchanges are an organized marketplace, either corporation or mutual organization, where members of the organization gather to trade company stocks and other securities. The members may act either as agents for their customers, or as principals for their own accounts.

Stock exchanges also facilitate for the issue and redemption of securities and other financial instruments including the payment of income and dividends. The record keeping is central but trade is linked to such physical place because modern markets are computerized. The trade on an exchange is only by members and stock broker do have a seat on the exchange.

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Stock Exchanges in INDIA

Other than Bombay Stock Exchange (BSE) and National Stock Exchange there are some regional stock exchanges in India and they are as follows:

1.       Ahmedabad Stock Exchange

2.       Bangalore Stock Exchange

3.       Bhubaneshwar Stock Exchange

4.       Calcutta Stock Exchange

5.       Cochin Stock Exchange

6.       Coimbatore Stock Exchange

7.       Delhi Stock Exchange

8.       Guwahati Stock Exchange

9.       Hyderabad Stock Exchange

10.   Jaipur Stock Exchange

11.   Ludhiana Stock Exchange

12.   Madhya Pradesh Stock Exchange

13.   Madras Stock Exchange

14.   Magadh Stock Exchange

15.   Mangalore Stock Exchange

16.   Meerut Stock Exchange

17.   OTC Exchange Of India

18.   Pune Stock Exchange

19.   Saurashtra Kutch Stock Exchange

20.   Uttar Pradesh Stock Exchange

21.   Vadodara Stock Exchange

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Bombay Stock Exchange

BOMBAY STOCK EXCHANGE

The Bombay Stock Exchange (BSE) is a stock exchange located on Dalal Street, Mumbai.

It is the oldest stock exchange in Asia.

The BSE has the largest number of listed companies in the world.

It has also been cited as one of the world's best performing stock market.

 The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia.

Though many other exchanges exist, BSE and the National Stock Exchange of India account for the majority of the equity trading in India.

 BSE's normal trading sessions are on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.

The Phiroze Jeejeebhoy Towers house the Bombay Stock Exchange since 1980.

It traces its history to the 1850s, when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of Mumbai's Town Hall.

The location of these meetings changed many times, as the number of brokers constantly increased.

The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'.

In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange.

The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform.

The Bombay Stock Exchange switched to an electronic trading system in 1995.

It took the exchange only fifty days to make this transition.

The BSE has also introduced the world's first centralized exchange-based internet trading system, BSEWEBx.co.in to enable investors anywhere in the world to trade on the BSE platform.

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National Stock Exchange

NATIONAL STOCK EXCHANGE

The National Stock Exchange (NSE) is a stock exchange in India located at Mumbai.

It is the 10th largest stock exchange in the world by market capitalization and largest in India by daily turnover and number of trades, for both equities and derivative trading.

NSE has a market capitalization of around US$1.59 trillion and over 1,552 listings as of December 2010. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India.

Both of them are responsible for the vast majority of share transactions.

The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY which means National Stock Exchange Fifty, an index of fifty major stocks weighted by market capitalization.

NSE building is at BKC (Bandra Kurla Complex), Mumbai.

NSE was promoted by leading Financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company.

In April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956.

NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.

NSE is the first national, anonymous, electronic limit order book (LOB) exchange to trade securities in India.

NSE Set up of S&P CNX Nifty.

NSE pioneered commencement of Internet Trading in February 2000, which led to the wide popularization of the NSE in the broker community.

NSE is the first and the only exchange to trade GOLD ETFs (exchange traded funds) in India.

Currently, NSE has the following major segments of the capital market:

    * Equity

    * Futures and Options

    * Retail Debt Market

    * Wholesale Debt Market

    * Currency futures

    * MUTUAL FUND

    * STOCKS LENDING & BORROWING

NSE's normal trading sessions are conducted from 9:15 am India Time to 3:30 pm India Time on all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange.

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