Nifty First Target Achived !!!!!

Dear All,
                  We told u to buy at 4790 levels for target of 4972--5150 today on the expiry Nifty hit 5000 so we book profit of 210 points and closing our position on Nifty for postional trade.


Thanks & Regards
Abhay Mehrotra

Market Outlook On broder basis

Dear All,

Nifty closes Above 4958 and Showed Strong Momentum. Now what Next .............In Our last post we said according to classical Technical analysis if Nifty closes above 4850 we will see target of 4972----5150 levels we maintain that stand and Suggest Buy on dips with stoploss placed at 4790 on closing basis.

Thanks & Regards

Abhay Mehrotra

Market Outlook On broder basis

Dear All,

We are presenting our analysis for coming week.

1. This for the first time we are talking about astro harmonic in Our Analysis , as per Astro harmonics , Time between 14 Sep to 18 Sep is Not good for market , Target can be seen at 4600, 4500, 4380 in coming week Cmp Nifty 4840.

We Advice to sell Short at 4840 with stoploss at 4915 on closing basis for target for 4680, 4600,4500, 4380.

2. As per classical Technical analysis that we use .........Market is capped at 4972 on upper range that mean any close above 4850 will lead us to 4972 range and a breakout above 4972 will give us a target of 5150--5350 levels.

If Nifty close below 4790 for two days we will head toward 4680-4600-4500--4380 levels.

So take postion accordingly........remember dont just trade but trade smart !!!!!!!!!!!!

Thanks & Regards

Abhay Mehrotra

What does it take to be a good trader?????

Dear All,

What does it take to be a good trader? Many would say it is an excellent understanding of the stock market, or perhaps a lot of good contacts. Having access to technology and the ability to get trades in quickly are important. But above all else, the one thing that is more important to successful trading is something that seems very simple.

Discipline.

Sounds simple, yet it is the greatest failing of people who lose in the stock market. Successful traders realize thatthey will not be right all the time. Many successful traders are profitable on less than half their trades. Given theselosing probabilities, the reason winners make money is because they cut losses short and let profits run. They havethe discipline to hit the eject button when they are proven wrong. And those who consistently lose money? Theyhang on for the dream

Fear of taking a loss or fear of missing out on an uptrend cause many market participants to hang on to losingpositions. So often, these traders tell themselves that they will sell when the stock falls to a certain point. However,when it does, they find a reason to establish a new limit. Too much attention is paid to the story and not enough attention is paid to the message that the market is telling.

When you take a position in a stock, you have to establish the point that the market will prove you wrong. Whetheryou choose to base that point on support and resistance levels, or the announcement of news, this point represents a bad outcome of your trading decision. If triggered, the exit sign is flashing. Head for the door.

Failure to take a loss when proven wrong will have two effects. First, it will likely make a potentially small loss grow into a big one. Remember that successful traders take small losses. A big loss takes often has a longer holding period, so it also ties up capital. And it will take more profits to recover.

Second, it will create fear for the trader who is seeing profit and does not want to feel the pain of a loss again. To avoid the potential disappointment of another loss, some traders take profits too early simply to lock in the good feeling that comes with making a win. Unfortunately, to be a successful trader you have to limit losses and let profits run. If you have small profits and big losses, well, you lose.

Maintaining discipline when trading is essential for success. If you have it, only simple rules of trading are necessary for success. Be strong, it is easier said than done.

Thanks & Regards

Abhay Mehrotra

63 % Return in cash calls from 1--9 Sep , 350 point Earned In Nifty so Far!!!!!!!!!!! in Sep only

Dear All,

In the month of Sep from 1--9 Sep we have given 63 % Return from our intra day cash calls and Earned 350 point on Nifty so Far.

Want to join us, be online in market and add my google id tradesmartindia@gmail.com for free Trading calls for 10 days

You need to mail me first for request regarding it , without mail, no id will be added ,so come join us and remember dont remain public ............happy trading!!!!!!!

Thanks & Regards

Abhay Mehrotra

Market Outlook On broder basis

Dear All,

Today Nifty close above 4680 convingsly with over 100 points, closes 4782, so the bearish falling wedge seems to be canclled .

Now What next , if this is a real breakout we will see target of 4850--4972---5100 levels in coming days , We will go long on nifty only and only if it closes above 4790 , for target of 4850--4972---5100. For creating short we will wait for nifty to close below 4680 for two days.

Thanks & Regrads

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!!

Dear All,

Nifty Target 4580 achived today as Nifty made day low at 4571 , Now if we close below 4580 on closing basis we will head toward 4500, 4450 in coming days and bearish Rising wedge will get confirmed this pattern will get cancelled as said earlier if Nifty close above 4680.

Sensex and Nifty are making Rising wedge a Bearish Formation so the targets of rising wedge are 14780, 14000 for sensex , rising wedge will get cancelled if we close above 15780 , and Target for Nifty is 4500, 4450, 4400 .

Join us to be ahead of public ............quality has a price , those looking for free tips will get banged by Smart Money .............. its ur choice to get banged or join us ........

Kindly contact at abhaycfa10@yahoo.co.in

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!! Today's Intra day Report Card

Dear All,

In Our last post we have written that if we not close above 4790 we can see levels of 4580 in coming days , Today Nifty hit day low 4596 ..................So Dont be Public join us send ur request for trading calls trial at abhaycfa10@yahoo.co.in ., a close below 4580 we will see levels of 4500, 4450 in coming days nifty need to close above 4680 to gain strength again for an up move .

Today's Intra day Report card

1. Short Nifty at 4740, target 4720, 4680 stoploss at 4755, First target achived

2. Short Nifty at 4735 Target 4705, 4680, 4650, 4605 stoploss 4755 All target achived

3. Buy m&m at 882 target 892, 899 , 915, 925 stoploss at 860 Second target achived

4. Buy maruti at 1475 target 1500, 1545 stoploss at 1440 All Target achived

5. Buy punjab bank at 692 target 698, 705, 710 stoploss at 675 First target achived

6. Buy tech mahindra above 965 target 972, 980, 999 stoploss at 945 All Target achieved

7. Nifty buy at 4620 target 4645, 4665, 4680 , we exit at 4610

Total Return on cash calls today 10.05%

Nifty point earned 140 , profit per lot 140*50=7000

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!!

Dear All,

In last post we have told you that close above 4495 will take Nifty to 4700 levels , Today Nifty closes at 4732 levels our next target is 4790 , Now if this is a real break out then Nifty need to close above 4790 levels , for target of 4840, 4900.

If unable to close above 4790 we can see 4580 levels in coming days , So the key level to watch is 4790 on closing basis.

Thanks & Regards

Abhay Mehrotra

Market Outlook On broder basis

Dear All,

We have already told you that we need two closing above 4495 levels to see buying coming in market we have one close above 4495 on Friday , If nifty closes above 4495 again on Monday we can see Nifty moving upto 4625--4680--4790 levels in Coming days .

Thanks & Regards

Abhay Mehrotra

Intra Day Report Card

Dear All,

Todays' Intra day Report card is as follows

1. Buy Nifty at 4460 target 4480, 4500 stoploss at 4445

2. Sell Nifty at 4500 target 4480, 4450 stoploss at 4515

See charts

Thanks & Regrads

Abhay Mehrotra

Market Outlook On broder basis: Two different probablity , Ril Buy or Sell

Dear All,

On sensex Chart we can observe a Falling wedge , A bullish sign. Sensex closes at 15024 if this falling wedge to work then Sensex need to sustain above 14500 levels any close below will cancel this pattern , On upper side we can expect a Target of 15350, 15650 and 16050 see charts

.............Now Second probablity is that We can also observe H&S Pattern on Sensex chart a Bearish sign , If we break 14700 then we can head towards 14000

See charts

Let see who wins Bulls!!!!!!!! or Bears !!!!!!!

Is Ril a Buy or sell.............we recommend to buy Ril at 1940 cmp target 1980, 2035 stoploss at 1900

In coming one or two trading session ........Reason Kindly see the charts

Thanks & Regards

Abhay Mehrotra

Market Outlook On broder basis

Dear All,

Nifty gone for a sell off today , so how to trade coming days market.

Nifty closes at crucial levels of 4380 levels a close below 4380 will ensure selling upto 4250 levels and if 4250 break with volumes on closing basis we can head toward 3980--3900 levels in days to come .

We will go short on Market if and only if closes below 4380 with stoploss placed at 4495 for said targets.

A close above 4495 for two days will ensure that buying is coming into market

Thanks & Regards

Abhay Mehrotra

Some Short Term Pick

Dear All,

Some Short term Delivery Pick Which are Expect to give 5--15 % Return in coming days .

1. FSL CMP --32.5

2. IFCI CMP --53

3. SUZLON CMP ---88

4. UNITECH CMP--92.5

5. HINDUNILEVER-- CMP --256

6. IDEA CMP--78

Thanks & Regards

Abhay Mehrotra

Nifty Trail Hit : We booked 220 point on Nifty as Profit

Dear All,

Our trail stoploss hit on 13th at 4480 so we exit short initiated at 4700 , Full 220 points profit . As of now we have no posiotn on nifty .

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!! Nifty Target 4380 Achived

Dear All,

We have gone short on market On 4 Aug at levels of 4700 for target of 4500, 4380, 4250, We have achived 4380 today on intra day basis.

Now we will trail with stoploss of 4480 on closing basis.

Thanks & Regards

Abhay Mehrotra

Intra Day Report call

Dear All,

Today's Intra Day call Report call is as follows,

1. Buy Nifty at 4362 target 4380, 4405, 4445, 4465 All target Achived

Reason For Nifty long ---- cross over of 13 ema and channel got broken see chart.

Thanks & Regards

Abhay Mehrotra

Intra Day Report call

Dear All,

Today Intra Day Report card is as follows,

1. Buy Nifty at 4415 target 4435, 4465, 4480 All Target Achived

2. Short Nifty 4475 target 4450, 4425 All target Achived

In Long call reason why we initiated a buy , bcoz 13 ema cross over 26 ema and demand index and elher trend showing an uptrend ...look at second chart.

In short call ,Reason why we gave short call is rising wedge formation on 5 min charts .Look at first chart.

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!!

Dear All,

On 4 th Aug we have gone short on market at 4700 levels for target of 4500, 4380, 4250 , Today nifty hit day low at 4399.80 quite close to our second target.

Now trail stoploss of 4580 on closing basis for target of 4380, 4250 in coming days .

Today's Intra day Report card-----

1. short Nifty at 4490 target 4450, 4425, 4400 stoploss at 4515 First target achived

2. Short Nifty at 4475 target 4450, 4425, 4400 All target achived

Note on Today's Nifty trade setup.----------

Today was the classical case of trendline resistance on 5 min charts , When nifty 5 min chart taken resistance third time at 4495 level it was clear indication that we have to go short but we waited till 4475 in our second call to test the weakness of market and gone short at 4475 for target of 4400 which we have success fully achived , kindly see the chart.

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!! Nifty Target 4500 achived

Dear All,

On 4th Of Aug we have gone short on market at 4700 levels for target of 4500, 4380, 4250 , On fridays 7 th first target 4500 hase been achived .

Now we will trail with stoploss at 4620 on closing basis for target of 4380, 4250 .

One reason we have given our last post why we gone short , now we showing charts with second reason.

Thanks & Regards

Abhay Mehrotra

Nifty levels bang on target !!!!!!!!!

Dear All,

On 4th of Aug we told you that we are going short on nifty at 4700 level for target of 4500, 4380, 4250 in coming days today , Today on 6th Aug Nifty hit 4550 levels 150 points profit.

Now we trail with stoploss to 4700(on closing basis) for target of 4500, 4380, 4250 in coming days .

Why we gave a sell call, we are showing charts, that was one of the

reason .

Nifty and Sensex Charts both showing Divergence .

Thanks & Regards

Abhay Mehrotra

Market Outlook On broder basis

Dear All,

Nifty in coming days can Target 4500, 4380, 4250 levels , We have gone short today with stoploss at 4790 on closing basis .

We have Shorted at 4700 levels with stoploss at 4790. We believe that untill nifty closes above 4790 for two days we see high volatality and weakness in market above 4790 if traded for two days Nifty will target 4850, 4980, 5095 ( chances are slim but market can surprise us)

Thanks & Regards

Abhay Mehrotra

Intra Day Report call

Dear All,

Today's report card is as follows .

1.Buy Bhel at 2300, target 2325, 2350 all target achived

2.Buy Nalco above 317 target 320, 325, 328 all target achived

3.Buy hindalco at 104 target 106, 109 all target achived

4.Buy Torrent power at 222 target 225, 228, 230 all target achived

5.Buy unitech at 92.50 target 94, 96 first target achived

6.Buy Bio con at 234 target 238, 245 we booked close to second target at 242

7.Buy Ib real estate at 256 target 260, 265 all target achived

Thanks & regards

Abhay Mehrotra

Intra Day Report call

Dear All,

Today's Intra day call is as follows

Short Nifty at 4660 target 4640, 4600, 4580 All Target achived

Intra Day Report call

Dear All,

Today's Report card is as follows ,

1. Short Nifty at 4565 target 4540, 4500, 4450 All target achived

2. Buy Nifty at 4440 target 4470, 4500 All target achived

Thanks & Regards

Abhay Mehrotra

Intra Day Report call

Dear All,

Today Intra Day Report card is as follows

Buy Nifty at 4525 target 4565, 4580, 4600 stoploss at 4505 , Two target 4565, 4580 achived .

Intra Day Report call

Dear All,

Our Intra day Report card for today

1. (10:18:39 AM): buy Itc at 222 target 225, 230 Target achived

2.(10:20:09 AM): buy gail at 336 target 338, 340, 345 stoploss at 330 All target achived

3.buy bio con in dlivery at 218--220 target 226, 245 in coming days

4.(10:26:58 AM): buy hero honda at 1660 target 1680, 1700 stoploss at 1620 We booked at 1675

5. (10:29:30 AM): buy fin tech at 1460 target 1480, 1500, 1525 stoploss at 1425 First target achived

6.(10:37:16 AM): buy sunpharma in delivery at 1210 --1180 range target 1240, 1280 in coming days .... Target Achived 1280

7.(2:00:51 PM): buy unitech in delivery at 82.50 target 85, 88 First Target achived

8. (2:04:52 PM): buy acc at 840 target 845, 850, 865 stoploss at 820 All Target achived

9.(2:19:12 PM): buy idea in delivery at 77.90 target 80, 85, 90 in coming days

10.(2:20:00 PM): buy abna llood at 950 target 975, 1000 stoploss at 930 First Target Achived

All calls hit target ..........get free trading calls for 15 days send ur request to

abhaycfa10@yahoo.co.in , equitychartguru@yahoo.co.in

Thanks & Regards

Abhay Mehrotra

Trading 27 Rules !!!!!!!!!!!!!

Dear All,

We are starting a series of post on trading rules , in first post i am just mentioning the rules , in later post we will discuss in details

Hope to see you trade better and in responsible way

Getting in the Game

RULE #1 Know Your Game

RULE #2 Have a Trading Plan

RULE #3 Think in Terms of Probabilities

RULE #4 Know Your Time Frame

Cutting Losses

RULE #5 Define Your Risk

RULE #6 Always Place a Protective Stop

RULE #7 Your First Loss Is Your Best Loss

RULE #8 Never Add to a Loser

RULE #9 Don’t Overtrade

Letting Profits Run

RULE #10 Keep Good Records and Review Them

RULE #11 Add to Your Winners

RULE #12 Use Multiple Time Frames

RULE #13 Know Your Profit Objective

RULE #14 Don’t Second-Guess Your Winners

Trader Maxims

RULE #15 Know the Limits of Your Analysis

RULE #16 Trade with the Trend

RULE #17 Use Effective Money Management

RULE #18 Know Your Ratios

RULE #19 Know When to Take a Break

RULE #20 Don’t Trade the News

RULE #21 Withdraw Equity Regularly

RULE #22 Be a Contrarian

RULE #23 All Markets Are Bearish

RULE #24 Buy/Sell 50% Retracements

RULE #25 The Only Indicator You Need

RULE #26 Study Winning Traders

RULE #27 Be a Student of Yourself

We will discuss in details of these rules in coming post

For Free trading calls for 15 days send your request to abhaycfa10@yahoo.co.in

equitychartguru.yahoo.co.in

Thanks & Regards

Abhhay Mehrootra

How to Manage a Share Purchase !!!!!!!!!!!!!!

Dear All,
Think of trading as a business. Proper management of the business will ensure a successful enterprise. In the same way, proper management of the activities of trading is required to provide for trading profits.If you buy a share for trading, what is your role in the trade ? After all, the market decides if the price will go up or down. You cannot control the movement of the price. What is the role of your skill in the trading business ?You can manage the trade properly, or mismanage it. Your role will play an important part in the success or failure of your business of trading.

You decide:
1. What is the trend of the stock ?

2. At what entry price is a purchase justified ?

3. Is there a valid stop loss near the entry price ? If not, should you take the trade ?

4. If the stock price falls a little but not enough to stop you out, will you evaluate the trade again after a period of time ?

5. If you are stopped out, will you consider a reentry ?

6. If the trade goes in your favor, at what point will you move the stop to brekeven ?

7. Will you buy more if the trade goes in your favor ?

8. If the trade is in profits, do you plan to sell a part of your position ? If so, what are the rules for exiting partial position ?

9. How will you keep trailing stops ?These are some of the issues that are in your control. As a trader, you should plan and manage them.

Notice that I have not discussed anything about the possible price movement.
Why ? Because the market is not within your control.
We can manage only what we can control

Zandu suggest try to use derivative strategies to trade highly volatile market, for any suggestion on trading strategies , derivative strategies and portfolio management kindly mail to me at equitytrader10@yahoo.in, equitytrader@in.com, niftytrader@in.com,equitychartguru@yahoo.co.in

For technical trading calls please visit ttp://www.equitychartguru.blogspot.com

For portfolio management advice please visit http://www.fundootechnicals.blogspot.com/

Thanks & happy trading
your's zandu

Bear Put Spreads: A Roaring Alternative To Short Selling

Dear All,
Two of the best features of options is that they afford an investor or trader the opportunity to achieve certain objectives and/or play the market in certain ways that they might not otherwise be able to. For example, if an investor is bearish on a particular stock or index, one of his or her choices is to sell short shares of the stock. While this is a perfectly viable investment alternative, it does have some negatives attached. First off, there are fairly sizable capital requirements. Secondly, there is technically unlimited risk, because there is no limit as to how far the stock could rise in price after the investor sold short the shares. Fortunately, options offer alternatives to this scenario.

The Put OptionOne alternative to shorting a stock is to purchase a put option, which gives the buyer the option, but not the obligation, to sell short 100 shares of the underlying stock at a specific price - known as the strike price - up until a specific date in the future (known as the expiration date ). To purchase a put option, the investor pays a premium to the option seller. This is the entire amount of risk associated with this trade. The bottom line is that the buyer of a put option has limited risk and essentially unlimited profit potential (profit potential is limited only by the fact that a stock can only go to zero). Nevertheless, despite these advantages, buying a put option is not always the best alternative for a bearish trader or investor who desires limited risk and minimal capital requirements.


Mechanics of the Bear Put SpreadOne of the most common alternatives to buying a put option is a strategy known as a bear put spread . This strategy involves buying one put option with a higher strike price and simultaneously selling the same number of put options at a lower strike price. As an example, consider the possibility of buying a put option with a strike price of Rs 50 on a stock trading at Rs. 51 a share.

Let's assume that there are 60 days left until option expiration and that the price of the 50 strike price put option is Rs. 2.50. In order to purchase this option, a trader would pay a premium of Rs 250. Then, for the next 60 days he would have the right to sell short 100 shares of the underlying stock at a price of Rs 50 a share. So, if the price of the stock fell to 45, or 40, or 30, or even lower, the buyer of the put option could exercise his put option and sell short 100 shares at Rs 50 a share. He could then buy back the shares at the current price and pocket the difference between Rs 50 a share and the price he paid to buy back the shares.


The other, more common, alternative would be to sell the put option itself and pocket the profit. For example, if the stock fell to Rs 40 a share, the buyer who bought the 50 put option at Rs 2.50 would be able to sell the put option for Rs 10 or more, resulting in a substantial profit.

Advantages of the Bear Put Spread AlternativeThe problem with buying or selling a put option is that the breakeven price for the trade in the example above is Rs 47.50 per share, which is calculated by subtracting the put premium paid (Rs 2.50) from the strike price (Rs 50). To look at it another way, the stock must decline. Also, a trader may not be looking for a substantial decline in the price of the stock, but rather something more modest.


In this case, an individual might consider the bear put spread as an alternative. Building on the same example, an individual may buy the same 50 strike price put option for Rs 2.50 but will also simultaneously sell the 45 strike price put option and receive Rs 1.10 of premium. As a result, the trader only pays a net cost of $140 to purchase the spread (Rs 2.50 - Rs 1.40 x 100 shares). There are two positives and one negative associated with this alternative compared to simply buying the 50 strike price put for Rs 250

Advantage No.1: The trader has reduced the cost of the trade by 44% (from Rs 250 to Rs 140).

Advantage No.2: The breakeven price rises from Rs 47.50 for the long put trade to Rs 48.60 for the bear put spread (the breakeven price for the put spread is arrived at by subtracting the price of the spread (Rs 1.40) from the higher strike price (Rs 50 - Rs 1.40 = 48.60).

As a result of entering the bear put spread, this trader has less dollar risk and a higher probability of profit. If the trader does not expect the price of the stock to decline much below 45 by option expiration, this may be an outstanding alternative.

Disadvantage of the Bear Put SpreadThere is one important negative associated with this trade compared to the long put trade: The bear put trade has limited profit potential. The potential is limited to the difference between the two strikes minus the price paid to purchase the spread.

In this case, the maximum profit potential is Rs 360 (5-point spread - 1.40 points paid = Rs 3.60). This trade will show a profit at option expiration if the stock is at any price below the breakeven price of Rs 48.60 a share. The maximum profit of Rs 360 will be reached if the stock is at or below the lower strike price of Rs 45 a share at expiration. While profit potential is not unlimited, the trader still has the potential to make a profit of 257% (Rs 360 profit on a Rs 140 investment) if the stock declines roughly 12% (from Rs 51 to Rs 45).

SummaryThe bear put spread offers an outstanding alternative to selling short stock or buying put options in those instances when a trader or investor wants to speculate on lower prices, but does not want to commit a great deal of capital to a trade and/or does not necessarily expect a massive decline in price. In either of these cases, a trader may give him or herself an advantage by trading a bear put spread, rather than simply buying a naked put option.



Zandu suggest try to use derivative strategies to trade highly volatile market, for any suggestion on trading strategies , derivative strategies and portfolio management kindly mail to me at equitytrader10@yahoo.in, equitytrader@in.com, niftytrader@in.com,equitychartguru@yahoo.co.in

For technical trading calls please visit ttp://www.equitychartguru.blogspot.com

For portfolio management advice please visit http://www.fundootechnicals.blogspot.com

Thanks & happy trading
your's zandu

Investing During Uncertainty

Dear All,
After a long we are back due to some personal reason i was not active on the blog. In today's post we are discussing how to invest during Uncertainty.


Every day it seems like the world is getting smaller. If you watch any financial television station or read the newspaper, you are most likely aware of how events in one country seem to have an ever-increasing affect on other countries around the world. We are more interconnected now than at any other time in history. It goes without mention that globalization definitely has its positives, but when threats of financial crisis, war, global recession, trade imbalances, etc, do occur it often leads to talk of moving money to safer investments and increasing government deficits. This rising uncertainty can confuse even the well-informed investor.


Uncertainty: Any time you put money at risk for the chance of profit there is an inherent level of uncertainty. When new threats such as war or recession arise, the level of uncertainty increases significantly as companies can no longer accurately predict their future earnings. As a result, institutional investors will reduce their holdings in stocks considered unsafe and move the funds to other sources like precious metals, government bonds and money-market instruments. This sell-off, which occurs as large portfolios reposition themselves, can cause the stock market to depreciate.


Effects of Uncertainty: Uncertainty is the inability to forecast future events; people can't predict the extent of a possible recession, when it's going to start/end, how much it will cost, or what companies will be able to make it through unscathed. Most companies normally predict sales and production trends for the investing public to follow assuming normal market conditions, but increasing levels of uncertainty can make these numbers significantly inaccurate.

Uncertainty itself can affect the economy on both the micro and macro level; a description of uncertainty on a micro level focuses on the effect on individual companies within an economy faced with the threat of war or recession, whereas the view of uncertainty on a macro level looks at the economy as a whole

From a company-specific point of view, uncertainty provides a major concern for those that produce consumer goods every day. For example, consumption may fall on the threat of a recession as individuals refrain from purchasing new cars, computers and other non-essentials. This uncertainty may force the companies in certain sectors to layoff some of its employees so that it can combat the impacts of lower sales. The level of uncertainty that surrounds a company's sales also extends into the stock market. Consequently, stock prices of companies that produce non-essential goods sometimes experience a selloff when levels of uncertainty rise

On a macro level, uncertainty is magnified if the countries at war are major suppliers or consumers of goods. A good example is a country that supplies a large portion of the world's oil. Should this country go to war, uncertainty regarding the level of the world's oil reserves would grow. Because the demand for oil would be high and the supply uncertain, a country unable to produce enough oil within its own borders would be required to ensure that enough oil was stored to cover operations. As a result, the price of oil would increase.

Another macro-level event that affects companies and investors is the flight of capital and devaluation of exchange rates. When a country faces the threat of war or recession, its economy is considered uncertain. Investors attempt to move their currency away from unstable sources to stable ones; the currency of a country under a threat of war is sold and the currencies from countries without the threat are bought. The average investor probably would not do this; however, the large institutional investors and currency futures traders would. These actions translate into a devaluation of exchange rates.

What's an Investor to Do?When situations of heightened uncertainty arise, the best defense is to be as well informed as possible. Keep updated by reading the newspaper and researching individual companies. Analyze which sectors have more to gain and lose with a war and decide on a long-term plan. Times of heightened uncertainty can lead to great opportunities for investors who position themselves to take advantage of it. Some investors might decide to be offensive and search for companies that provide goods or services that will lead to great returns when things turn around. It is difficult to commit capital during uncertain times, but it can often reap huge rewards in the longer run. Those who want to mitigate uncertainty and risk might be content leaving their money where it is or perhaps moving it to safer securities. Regardless of which strategy you decide to take (if any), you can't go wrong over the long term by keeping yourself well informed and getting into a position so that you can take advantage of prices when the things reverse.




For Accurate Nifty analysis please visit www.zandusmartchartcalls.blogspot.com


For portfolio management advice please visit http://www.fundootechnicals.blogspot.com/

For getting portfolio management advice and trading and investments calls please mail to me at equitychartguru@yahoo.co.in or fundootechnicals@yahoo.co.in

Thanks & happy trading
your's zandu