I generally trade in stocks whose range I know. For example, Edelweiss used to trade between around 63.00 and 65.00, Ballarpur between 43 and 46, PFC between 368 and 376. I would buy if the prices were low or short if they were near their daily highs.

But since the past few days, everything has turned upside down. The range in which the stocks trade has broken, and I don't know which direction they will go. On last Friday and this Monday, I bought Edelweiss since they were at the lower end of their range, but with the markets falling, they also fell, and I ended up making losses. I have traded only one day in this entire week because of this.

I don't have much experience of the market as it is not long since I started trading and I'm facing the markets going down for the first time.

Is it possible for anyone to tell how serious this fall is? Will it be start going back to its previous week's levels next week, or is it a short-seller's market now?

I talked to my broker and he said if the market goes down, all the stocks will go down, and at the same time he gives positional buy calls everyday. If Nifty is made up of only 50 stocks, why should it going down also mean a fall in the prices of all stocks?

When in confusion, stay away!

Rest of the market is not going down because Nifty is going down.

Nifty is going down because the entire market is going down.

The proportion of stocks that go up in a bull market is lower than the proportion of stocks that go down in a bear market.

I had read this somewhere many years back.

70% of the stocks go up in a bull market, but 90% of the stocks go down in a bear market.

I have never verified these ratios, but I agree with the idea.

I can think of many stocks that are lower than they were when the market made a panic bottom in late 2008.

However, I can't think of any stock that went up in the January 2008 - November 2008 period.

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This is the time to stick with large caps only. You can buy large caps which are decently priced.

Start accumulating the stocks and I am very much confident that we will bounce back in 1-2 months. Just keep accumulating the large caps which are decently priced.

You can start with RIL as it is at a very good price and when the markets will bounce back, it is very much possible that it will lead the rally.

Other large caps can be purchased as well. Don't go for small and mid caps as they can fall much more.

Purchase those stocks which are fundamentally well priced.

I prefer stocks like RIL, Tata Steel, JP Associates, Reliance Infrastructure etc.

I will start accumulating from Monday as the markets are expected to bounce back in maximum 2 months. My personal belief is that the markets will take out new highs in 2 months.

Don't buy stocks for short term as volatility in the short term is expected. Buy stock with a time frame of 6-8 months and you will definitely make a nice gain.

For the record, my counts are finished on upside, I think all bounces will be opportunity to short or liquidate your holdings. Market today broke its 1 month support



There is only one possibility of alternate scenario, if market respects 18000 level and move above, then one more wave is due on upside.

But, for now since market broke 1 month area, I will flow with flow!

It's going to take that long? It means no intraday from now on?

Definitely, no intraday!!

The markets are expected to fall further. It may rise 50-100 points on Nifty, but don't get trapped as of now. Wait for clarity to emerge.

Till then, don't go long.

If, you want to invest for long term, start accumulating from next week in small tranches.

Check Lupin.

Refer to this article in ET on 6th Nov.

Some highlights

Is there any stock which trades in the same narrow range for long periods of time?


Herd mentality, maybe.

What is the basis for this prediction?

I never done trading, but I wonder why no intraday when the market is down?

For a trader what difference does it make whether the market is up or down.

Not that I agree that the market is down - I still feel the market is very high. I can hardly find any under-priced stock in this market.

From a fund manager point of view what exactly is profit booking?

Saying I am a fund manager, my fund has currently 3 stocks

stock A worth Rs. 1000 at current price
stock B worth Rs. 500 at current price
stock C worth Rs. 750 at current price

My Total Fund value is 2250.

Now I book profits on A & B - I sell them off.

So now my fund's portfolio is

Stock C - Rs 750
Cash - Rs. 1500
Total fund value is 2250.

If they use the cash to buy new stocks X & Y.

Again, their total fund value isn't going to change.

So how exactly does booking profit help them get better bonuses?

Are they evaluated only on stock they have already sold? Shouldn't they be evaluated on how much they increased the fund value or NAV or something like that?

Some PMS or fund managers charge on profit booked. (and never on loss booked )

e.g Sharekhan's "20% profit sharing on booked profits on quarterly basis."

Another point is they anticipate market to go down in short term but want to lock their bonus.

e.g Share ABC and XYZ fluctuates between 100 and 200 in a quarter. In Oct it is 100; 200 in Nov and again 100 in Dec.

To maximize brokerage from profit sharing it is prudent to churn the portfolio a lot when near the peak.

Book profit in one overvalued share, get the profit share, buy another overvalued share get the brokerage.

In short screw the client.

Can anyone please tell what happened today? Is it a new scam or is it the usual FDIs selling off or some new reason?

After many days, I made a long position with a large amount on Skumars yesterday (my broker's call of buy at 87, target 93, stoploss 84). Its normal lows were around 83, so I thought today it won't go that low and bought at 86 X 700 instead. Then it broke the stoploss on that same day, and today it fell to 64.35. The last time it went below 70 was on 7th July (69.50). Now I am sitting on a huge loss and I have to sell in one or two days since I bought the whole thing on margin and have got a negative balance.

I also bought Nelco for intraday last week but can hold it; I bought at 123.40 X 200, today it hit a low of 96.50. The last time it went below 100 was 24th February when it made a low of 98.80. I started looking at its previous data and my BP kept rising as I went back a month one by one. At this rate the market will keep falling till it hits zero, where there will be a buying opportunity.

It seems only delivery based trade without using the margin is what should be done now. Then you can keep holding and it doesn't matter if the stock falls.

There were rumors that even more operators/brokers are going to investigated by SEBI and other regulators.

I have no idea how much of this is true and how much isn't.

I have no idea who sold today, but looking the price erosion that happened in different stocks, I think everyone was selling . .

I didn't buy anything today. If we have one more such down day, I may pick up a few good quality stocks for the short-term.

Trading on margin in such a volatile market is suicidal. Buy only if you can take delivery.

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Hey Alchemist which value stocks are you talking about to buy?

Here everything seems to be in red and the real value of each stock seems to be inflated with daily disclosures.

Sensex falls most in 6 months; telcos, banks drop - The Economic Times.

I haven't made any list as such.

If you are going to put in lot of money and want to hold for the long-term, go for stocks with stable businesses - companies whose businesses aren't generally affected by economic conditions.

e.g. Rural Electrification Corporation.

or you can buy stocks with good dividend yields.

e.g. GIC Housing or Can Fin Homes. Can Fin Homes isn't currently paying much dividend, but has potential to pay much more.

If you are want to trade short-term, you should be buying the stocks that have fallen the most.

However, don't put much money into the markets and avoid stocks that have been named in the various reports.

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Note:

I am not buying any of the stocks that I have mentioned in the earlier post.

I think it is best to wait for even lower prices.

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Alchemist, please update the title of this thread. "These few days" is too generic.

"If past history was all there was to the game, the richest people would be librarians." - Warren Buffett

Any suggestions on tools to screen for stocks with high dividend yields?

Google Finance does a good job for US stocks.

Every few days the markets crash and the TV channels report that it happened because of the FIIs selling off. If these people keep selling off all the time, when do they buy, when it gets slightly lower? That's short-term trading. I thought FIIs were in investment.

Today Nifty went down to 5702.85 when I last checked. This guy from IIFL says it may go down to around 5400:

Markets may drift to 5400 on FII concerns: IIFL - CNBC-TV18

Does that mean we should buy around that time and wait for 6000? Is it possible that we buy around 5400 and it goes even lower? I wasn't around in 2008 but what I've read about it is scary.

Lot of people were counting on 5700 support. Nifty bounced back couple of times from that mark, but on 14th Jan 2011, not only it broke through 5700, it broke even 5650. I won't be surprised if it is indeed headed for 5400.

Everyone was talking about new highs in January. and we get near there nifty @ 6173 on jan 3. But after that this sudden fall to 5650 ? now they talking about interest rates, inflation etc. Certainly market pundits caught on wrong foot this time. Many traders long on stock futures trapped very badly this time because Nifty has corrected 6 - 8 %, while many stocks down 10 - 15%.

Suppose I buy Nifty at 5450, is there any chance that it may fall even further? I mean, another 200 points or so. I've never traded in futures before and I don't want the first time to be a loss. And how suddenly will it happen, because I haven't transferred the money to the account yet.

Generally when the market falls, the next day it rises, even if it is only for a while, so should Monday morning be a long position? I'm thinking of going long on Gail since it fell heavily on Friday.

When will we see 6000 again, is it possible this month?

If you haven't traded in futures yet, I would recommend starting with Nifty-Futures and staying away from individual stock-futures as the volume is lower in stock-futures and the possibility of wild swings is much higher.

The overall sentiment is pretty bad with the current inflation and interest rates picture. In my opinion, the possibility of making money on shorts on 17 Jan 11 is more than on longs.

Market is swinging wildly at present, 100 - 150 points up and down. So trade any position, strictly with SL.

Nifty @ 5,696.50.

My optimist view to see nifty at 6000 again.

But on real world next level will be 5200.

Thoughts?

Every time the market falls, there is news of loss of these many crores. For example, the news for Friday was that the downslide on bourses today wiped off over Rs 1,22,000 crore from the market wealth. The total investors' wealth, measured in terms of cumulative market valuation of all the listed stocks, fell by Rs 1,22,129 crore in a single day to stand at just over Rs 65,00,000 crore at the end of the trading session.

Does this mean the FIIs have sold and taken money out of the country, or is it something else?

When a stock price goes down, the market value of the company decreases.

A stock may go down a volume of few shares (worth few hundred rupees), but the change in market value of the company can be in crores of rupees.

The above news only says that total market value of the all the listed stocks went down by Rs 1.2 lac crore. That was not the market turnover.

On Friday, FIIs had sold shares worth Rs 2400 crore and they had bought shares worth Rs 2544 crore.

Thus the net figure for FIIs was Rs 144 crore on the buy side.

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Finally I found a few screeners: ICICIdirect, AskKuber

The Dividend Yield reported in these different sites seem to be very different from one another, vs that reported in moneycontrol.com

Without going to the individual Annual Reports, is there one website that we could rely on, for this kind of basic info?

Use moneycontrol.com.

Just check previous year's dividend paid (in crore) and divide it by the market capitalization of stock.

Keep in mind that if a company has to sustain its dividend, it has to maintain its profitability too.

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Thanks. The Dividend History link on MC is quite helpful; Dividend Yield History would be even better, if readily available out there. I'm screening for stocks that can be expected to deliver stable and robust dividends, over the next 10 years or so.