What will happen when a stock market! price rise up and goes down?

Stock prices change each day because of market forces. By means of this we denote that stock prices change because of “supply and demand”. If more people want to buy a stock (demand) than sell it (supply), then the price goes up!

In opposition, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would go down.

Understanding supply and demand is easy. What is difficult to understand is what makes people like a particular stock and dislike another stock. If you understand this, you will know what people are buying and what people are selling. If you know this you will know what prices go up and what prices go down!

To figure out the likes and dislikes of people, you have to figure out what news is positive for a company and what news is pessimistic and how any news about a company will be interpreted by the people.

The mainly vital factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn't going to stay in business. Public companies are required to report their earnings four times a year (once each quarter).

Dalal Street watches with great attention at these times, which are referred to as earnings seasons. The reason behind this is that analysts base their future value of a company on their earnings projection. If a company's results are better than expected, the price jumps up. If a company's results disappoint and are worse than probable, then the price will go down.

Apparently, it's not just earnings that can change the feeling people have about a stock. It would be a rather simple world if this were the case! During the “dotcom bubble”, for example, the stock price of dozens of internet companies rose without ever making even the smallest profit. As we all know, these high stock prices did not hold, and most internet companies saw their values shrink to a fraction of their highs. Still, this fact demonstrates that there are factors other than current earnings that influence stocks.

So, what are "all the factors" that affect the stocks price? The best answer is that nobody really knows for sure. Some believe that it isn't possible to predict how stock prices will change, while others think that by drawing charts and looking at past price movements, you can determine when to buy and sell. The only thing we do know is that stocks are volatile and can change in price very quickly.

Just remember this: At the most fundamental level, supply and demand in the market determines stock price.

There are many types of techniques and methods that investors use to figure out whether a stock price will go up or down! We will try to give you an introduction to these techniques in this article.

But before we go into the concepts of stocks picking, and the techniques of analysis, let us understand one last basic thing....

Study about Day Trading /Intraday Trading!

Day trading: The means day trading is the trader trying to make money buying and selling stocks during the day taking benefit of the daily price movement. Day traders end the day flat.

Some day traders focus on very short or short-term trading, in which a trade might last seconds to a few minutes. They buy and sell many times in a day, trading very high volumes daily and therefore receiving big discounts from the brokerage.

Some day traders focus only on momentum or trends. They are more patient and wait for a ride on the strong move which may occur on that day. They make far fewer trades than the aforementioned traders.

It is usually stated that 80-90pct of day traders lose money. Also price movements in a day are few, so why people trade only in a day? What are advantages of being a day trader?

Benefits of Day Trading :

Fewer Stresses

To avoid the risk of price gaps day traders close all their positions at the end of a trading day. Due to this, day trading is less stressful than holding stocks overnight. After market closed you are not worried what will happen until tomorrow and what news will hand out. You never ‘lost sleep'; in the morning have a nice feeling because you don't care what the market's doing at the open.

Contemptible Commission

One thing that makes day trading potentially profitable is commission structure. Day traders pay ‘per share' instead of ‘per trade' structure. If you pay about $10 per trade now when you turn into a day trader, you might pay more than $0.01 per share.

Increased Leverage

Day traders could have 4 times their equity as intraday buying power. This great margin can raise your profits if used shrewdly. This increased leverage makes day trading very dangerous, especially if one has poor discipline, risk or money management.

Profit in any market direction

Day trading often will utilize short-selling to take advantage of downwards stock prices. The ability to lock in profits even as markets drop throughout the trading day is very useful during bear market conditions.

Some Techniques of Day Trading

Range trading

A range trader watches a stock that has been increasing off a support price and declining off a resistance price. That is, every time the stock hits a lofty, it falls back to the low, and vice versa. Such a stock is said to be "trading in a range", which is the opposite of trending. The range trader therefore buys the stock at or near the low price, and sells the high.

Trend following

Trend following, a strategy used in all trading time frames, assumes that financial instruments which have been growing bit by bit will continue to increased, and vice versa. The trend follower buys an instrument which has been increasing or short-sells a falling one, in the hope that the trend will continue.

Scalping

Scalping initially referred to spread trading. Scalping is a trading style where small price gaps created by the bid-ask spread is exploited. It usually involves establishing and liquidating a position rapidly, usually within minutes or even seconds. Scalping extremely liquid instruments for off the floor day traders involves taking quick profits while minimizing risk (loss exposure). The basic idea of scalping is to exploit the incompetence of the market when volatility increases and the trading range enlarge.

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BANKING AND FINANCE NEWS!

Andhra Bank Q3 net profit rises to Rs 275 CR:
The PSU Andhra Bank (AB) recorded a growth of 29.47 per cent in its net profit during Q3 end December last at Rs 275-crore as against Rs 213-crore during the corresponding period last year.

Announcing the Q3 results, Anil Girolra, Executive Director of AB said here today that the over all performance of the bank was exellent in all fronts.

He said net profit of Andhra Bank zoomed to Rs 806-crore for the nine months period from Rs 452-crore of the corresponding period last year, with a growth of 78.32 per cent.

Total business touched Rs 1,17,899-crore, up by 23.04 per cent with deposits at Rs 66,547-core clocking a growth of 23.70 per cent and acvances reaching Rs 51,352-crore with a growth of 22.19 per cent. Credit Deposit ratio stood at 77.47 per cent, Girolra said, adding that bank expected to touch a business of Rs 1,30,000-crore by March next.

The Bank has opened 112 branches all over the country while it plans to open another 20 in the next two to three months the bank's ED added.

IDBI Bank announces repayment of IDBI SLR Bonds 2010 :

IDBI Bank said that the repayment of 11.50 per cent IDBI SLR Bonds 2010 56th Series will be paid on March 13, 2010.

No interest will accrue on the bonds after March 13, the bank said in a press release issued on Monday.

Book closure of the 56th Series will be observed with effect from February 13, after which no request for transfer will be entertained, the bank said.

Investors holding the bonds in the form of Promissory Notes should tender the bonds at the concerned branch of IDBI Bank before February 20 to facilitate repayment in time, the release said.

Investors, having investment in the form of 'Entry-in-Account’ with IDBI Bank should furnish a receipt in the prescribed form for the principal amount, along with the relevant certificate.

In case the bonds are held in demat form, bond-holders need not furnish any document. The bonds will automatically be debited and the redemption proceeds will be sent to the investors, the bank said.

ICICI Q3 net falls 13.4 per cent :

ICICI Bank, India's No.2 lender, reported a smaller-than-expected 13.4 per cent drop in quarterly net profit, as demand for retail loans helped offset the impact of a drop in treasury income.

ICICI said its October-December net profit fell to Rs 11.01 billion ($239 million) from Rs 12.72 billion a year earlier. A Reuters poll of analysts had forecast net profit of Rs 10.55 billion.

Indian banks were mostly insulated from the direct impact of the global credit crisis, but the world downturn hit the country harder than expected leading to a sharp slowdown in credit growth in the current financial year.

Demand for credit is expected to pick up in the near future, as improving business and consumer confidence brings back corporate, housing, auto and retail demand in Asia's third-largest economy.

Shares in ICICI Bank, valued at $21 billion, fell 3 per cent in October-December, lagging a small gain in the sector index.

Rel Capital to sell up to 20% stake in MF arm :

Anil Ambani Group's financial services firm Reliance Capital is considering divesting up to 20 per cent stake in its mutual fund arm, Reliance Asset Management Company, to an overseas strategic partner.

Induction of global partner would help Reliance Asset Management Company to expand its reach and help improve product, technology and process, sources said.

Reliance Capital holds 93.37 per cent in Reliance Asset Management Company, the largest mutual fund house with asset under management over 1.18 lakh crore.

When contacted, Reliance Capital spokesperson said, "As a policy, we do not comment on speculations."

In 2007, Reliance Capital sold 5 per cent stake to global investor Eton Park for Rs 501 crore, at an equity valuation of Rs 10,000 crore. Eton Park Capital Management is a hedge fund founded by former Goldman Sachs partner Eric Mindich.

The investment valued the asset management firm at about 13 per cent of its assets under management and the valuation translated into a price of Rs 400 per share of Reliance Capital.

The development assume significance in the light of UTI Asset Management Company entering into an agreement with the US-based T Rowe Price for selling 26 per cent stake to the foreign institutional investor.

WORLD MARKET WATCH!

Stock Info Market Monitor

Why is Jonathan! Garner shifting from tech to oil stocks?

Jonathan Garner, Chief Asian and Emerging Market Equity Strategist, Morgan Stanley, says there is a high chance of the markets setting new highs in the second-half of this year because of the underlying strength in earnings growth and reasonable valuations. "We are overweight on India."
He feels the market isn't focussing on interest rate increases sufficiently.
Among sectors, Garner is bullish on oil and gas, financials, and consumer discretionary stocks. "There are interesting developments in Asia in relation to upstream production, particularly gas. We are less keen on downstream industries." He recommends investors to shift from tech stocks to upstream energy stocks.

Wipro! Q3 net profit up 4.76% at Rs 1,217 cr

India's third largest IT services exporter, Wipro has declared its third quarter results of FY10. It has reported a jump of 4.76% in its consolidated net profit of Rs 1,217 crore in Q3FY10 as against Rs 1,161.7 crore, (QoQ).
The company's consolidated revenues increased 0.71% to Rs 6,966 crore versus Rs 6,917.2 in the previous quarter. The numbers were better-than street expectations; CNBC-TV18 was expecting net profit at Rs 1,152.1 crore and revenues at Rs 6,749.3 crore while third quarter numbers of Wipro were lower than Infosys and TCS.
In dollar terms, its revenues went up 5.8% to USD 1126.8 million, QoQ.


IT services business added 31 new clients.
Wipro's Chairman, Azim Premji expects IT budgets to be flat to marginally positive in 2010
Wipro Q4 Guidance
It is expected IT services revenues at USD 1161-1183 million in Q4FY10 versus USD 1126.8 million (QoQ), a growth of 3-5%.

BNP Paribas' sector/stock picks !post Q3 earnings

Manishi Raychaudhuri, Managing Director and Head of Research, BNP Paribas Securities, has turned overweight on the IT sector. "TCS and Infosys are our favourite stocks in the largecap tech pack."
Axis Bank from the banking space is Raychaudhuri's top pick. He likes IRB Infra, Punj Lloyd from the capital goods space. However, he is underweight on the energy sector.
So, what are his budget expectations? Raychaudhuri sees some rollback in excise duty cuts.

Wipro Q3 net profit up 4.76% at Rs 1,217 cr

India’s third largest IT services exporter, Wipro has declared its third quarter results of FY10. It has reported a jump of 4.76% in its consolidated net profit of Rs 1,217 crore in Q3FY10 as against Rs 1,161.7 crore, (QoQ).
IT services business added 31 new clients.
Wipro’s Chairman, Azim Premji expects IT budgets to be flat to marginally positive in 2010
Wipro Q4 Guidance
It is expected IT services revenues at USD 1161-1183 million in Q4FY10 versus USD 1126.8 million (QoQ), a growth of 3-5%.