BSE Sensex 3-week low on FEB 9

Falling for the seventh straight day, the benchmark BSE Sensex today slumped over 490 points on sustained fund outflows which also pulled down the rupee to nearly four-week low of 62.17 against the dollar on exit polls showing that the Narendra Modi-led Bharatiya Janata Party (BJP) may not be able to form government in Delhi with Arvind Kejriwal’s Aam Aadmi Party (AAP) all set to steal the thunder.

Gold prices too plunged by Rs 410 to over two-week low of Rs 27,790 per 10 grams in the National Capital due to poor demand and weak global cues.Stocks markets slumped over 1.50 per cent due to across the board sell-off triggered by exit polls that predict defeat for BJP in Delhi election and weaker-than-expected results by corporates.

“Disappointing corporate earnings and caution ahead of GDP for the December quarter, accelerated selling activity on the bourses” said a broker, The BSE Sensex fell by by 490.52, or 1.71 per cent, to end at 28,227.39, a closing level not seen since January 16.

The 30-share index has plunged from record highs losing 1,454.38 points, or 4.90 per cent, in its longest losing seven-session streak in 15 months. It hit an all-time high of 29,844.16 on January 30.The 50-share Nifty tanked 134.70 points, or 1.56 per cent, to close at 8,526.35 points.

Stocks of capital goods, metal, auto, banking, consumer durables, FMCG and refinery declined sharply on heavy selling pressure.“Markets reacted negatively to exit polls on Delhi election, which indicates the Aam Aadmi Party would form the government in Delhi and that would be the first state election defeat of party ruling in Centre, post Lok Sabha election,” said Jayant Manglik, President-retail distribution, Religare Securities Ltd.

Foreign funds continued to remain net sellers on domestic bourses which weighed on the sentiment, brokers said. FPIs sold shares worth a net Rs 96.45 crore on Friday last.Metal stocks such as Tata Steel, Sesa Sterlite, JSW Steel, Hindalco, SAIL and Jindal Steel and Power came under pressure, tracking global prices after a weak Chinese data.

In the forex market, rupee declined by 48 paise to close at nearly four-week low of 62.17 against the dollar.

The rupee weakened due to fresh dollar demand from banks and importers, fall in stocks and a strong dollar in overseas markets, dealers said.

Dipen Shah, Head of Private Client Group Research, Kotak Securities
Markets were weak today largely on the back of the exit poll results for the Delhi assembly elections as well as weak global cues. Weaker-than-expected results from L&T also impacted market sentiment. We believe that, the outcome of the Delhi assembly elections will not have any major long term impact on the fiscal initiatives which are expected from the Central Government. Thus, we believe that, there will be no major impact on the growth rates of the country. Going ahead, we believe that, the budget announcements will be an important event to watch out for.

Market Outlook by Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services

Q3FY15 results continues to shock the market, though at the start of the result month expectations were lower say only 4-5% Sensex earnings growth, but actually they are much lower than consensus. The latest development in Delhi should have provided added factor to the consolidation but considerable factors to the fall are no rate cut in the near-term, poor results and concern in Euro. As a result Banks, Infra, Metals and capital goods are giving highest impact.

Market Wrap Up by Alex Mathews, Head Research, Geojit BNP Paribas Financial Services
The markets today remained under pressure due to weak global cues. The global markets were also down on weak Chinese trade numbers, Greece political uncertainty and of the rate hike concerns by the US central bank.
Nifty today closed at 8526, down around 134 points.  The market breadth stood negative as there were seen 938 stocks advancing against 1908stocks declining. The Nifty volatility index, India VIX stood at 22.0150 up around 6.42%.
The mid-cap and small-cap sectors closed down around 1.41% and 1.50% respectively.
All the sectors ended in red and the major sectorial losers for the day were capital goods and Realty which closed down around 4.31% and 2.73% respectively.
In the stocks’ front, selling were seen in LT and Tata steel, closed down around 6.60% and 5.75% whereas buying were seen in Bajaj Auto and HCL Tech which closed up around 2.06% and 2.03% respectively.
The FIIs were net sellers in the capital market segment, sold shares worth Rs 96.45 crore on Friday, 06 February 2015. On the other hand the DIIs were net buyers on 06 February 2014, bought shares worth Rs 115.49 crore as per the provisional data from the stock exchanges.
The European markets fell as on the political uncertainty in Greece as the Prime Minister reaffirmed his rejection of the country’s international bailout program.  The US index futures were also trading lower.
Tomorrow companies like Suven, Jk Paper, Speciality, Radico, ABB, TRF, Care rating,, Zicom, NALCO, BEML and Hexaware may announce their earnings.

how political instability will affect stock market.

There have been a lot of ups and downs in the market condition and so it is very difficult to make any sort of guesses in the market. If you manage to get good money from the stock market you would be able to gain the right confidence and this would in turn help you gain good confidence. There are also many important concepts that exist in the market and so you have to know how to make the right choice of stocks from the market. The concepts of the market like MCX, NCDEX…etc also should be known to you very well. If you fail to understand or try to make good study of the different concepts then you cannot make any profit. You would also be able to make the right profits when you feel that you have all the latest updates of the market. Political instability too plays a huge role and this in turn affects the market. You need to get good updates of the latest information of the market that would help you to make the right income. If you fail to understand the terms and conditions of the market then you would be in a difficult position to get any good amount of money from the market. You have to know the right amount of money that you are ready or willing to invest in the shares. There are lots of different ways where you would be able to make the right income and get the latest updates of the market. If you try to investigate the market then you would find that there are times when political instability has affected the market to a lot extent and the investors have to suffer for this. You would also find that examples like 2G spectrum that created political instability and it had a lot of bad impacts on the market. There have been a lot of different cases that has led to a bad effect on the stock market. If you like to know about the stock market well then it is quite important for you to get a good source of information that would help you to invest in the right stocks. You would be proud when you make the best research and that too by asking for any advice from your friends.  It is important for you to understand how political instability will affect stock market.

Bribery and other scams
You might know about the scam of the housing finance bribery that also took place in India. This involved a lot of top officials and PSU’s. This too affects the stock market a lot. This is because this case dampened the domestic trading to a lot extent.  You can get to look at these types of news when you visit a good website. The corruption in the country has led the common people to suffer a lot. If you want to make good money and that too by making good investment in the stocks then knowing all the important conditions of the market is very important for you. You would be able to feel an increase in your self confidence by making good money from the stock market. You would also feel much safer when you try to make the right investment at the right point of time in the commodity market as well. This type of trading in the market has much lesser risks and this helps you to make good amount of money or profits. So you should also be able to know how to carry on with this trading in the market.

Recession period
There was also a huge downfall in the stock market that was witnessed in recession period. You have to know all the latest updates of the political scenario that would help you to take the right decision in the market without any problem. You would feel that you have been able to make good income from your trading in the market and it is best if you can get some share tips for you. So you have come to know how political instability will affect stock market.

Narendra Modi become important for the stock market

Sensex closes the day with 216.14 points gains at 24,121. Nifty also rises 79.85 points, or 1.12%, to 7,203.

Over 200 scrips, including the heavyweights like Reliance Industries, ONGC, State Bank of India, HDFC Bank, Indian Oil Corporation and ICICI Bank, hit 52-week high on strong buying support from funds. Many of the stocks surged more than 10 per cent in the intra-day.


EXPERT SPEAK: Ninad Karpe, chief executive officer and managing director at Aptech

The BJP manifesto is very holistic and wholesome where vocational education and employment generation is concerned. Skilling the youth and employment generation is a virtuous circle and the manifesto has given enough attention to this element. I believe these two points are what the country needs the maximum today. I also believe the strong mandate given by the people of India to BJP will further bolster the new government to laying emphasis on developing the human skill infrastructure.

The human skill infrastructure involves access and availability of financing, particularly to the under-served, creating an institutional framework, recognition of skills, improving the quality of present vocational delivery mechanism, social acceptance and interface with the industry for acceptance from the jobs perspective.

3.30 pm: ICICI Securities raise their target price for ONGC and HPCL stocks to Rs 439 and Rs 428, respectively.


3.24 pm: Stocks of oil marketing companies rise over 6%. HPCL, BPCL and IOC gained 7.34% to 403.10, 6.39% to Rs 550.05 and 7.28% to Rs 330.
2.54 pm: Banking stocks start losing steam with the BSE Bankex off 5% from its high.

EXPERT SPEAK: Nilesh Shetty, Associate Fund Manager-Equity at Quantum AMC

The strong showing of the BJP has exceeded market expectations driving a strong rally in markets. However, the real economy continues to remain weak and market participants would be keenly watching policy announcements from the new government to drive a turnaround in the investment cycle. Current valuations have already set a high benchmark and any disappointment on policy announcements could lead to a correction, Shetty says.

Murthy Nagarajan, Head-Fixed Income, Quantum AMC

"The poll results are on expected lines. The debt market is expected to be rangebound with the ten year to trade in the range of 8.60-8.80 levels and the currency is expected to trade in the range of Rs 58 to Rs 62 against the dollar in the coming months."


2.47 pm: Around 198 stocks touched their 52-week high on the National Stock Exchange. On the other hand, 29 stocks hit their 52-week low on the exchange at 2:35 pm.
EXPERT SPEAK : Nirakar Pradhan, chief investment officer, Future Generali India Life Insurance


The strong mandate received by NDA this morning is positive for both equity and debt markets. A stable and decisive government can reengineer Indian growth story through spearheading structural reforms going ahead, and thus increasing foreign investors' interest on India. While a lot of the positives are already factored in by the markets, now everyone will be watching out for actual steps to be taken by the government starting with the union budget and tax reforms etc. With the likelihood of investment cycle kick-starting soon, investors could look at buying at every fall cyclicals such as banking, cement, capital goods and Oil & Gas.
2.12 pm: At 2.11 pm, Sensex falls 1,239.62 points from its day high of 25,375.63. Trading at 24,136.01 levels.


2.07 pm: The market took a course correction and it is little above its opening level. Now of the 30 stocks in the Sensex, 12 stocks are in the red and the worst performing stock is Tata Steel (-4.98%) and the best performing stock is Sesa Sterlite Ltd with +7.71%.


1.45 pm: Nifty plunges 110 points in 10 minutes. The NSE index was trading at 7,190 against 7299.70 ten minutes earlier.

1.32 pm: After a long dull period all the stocks of the CNX Realty are in the positve. The index itself is up 6.47%. Oberoi Realty (+2.19%) is the laggard and India Bulls Realty is leading the index with +16.58%

1:30 pm: In the CNX Pharma which is down (-0.88%) there are only two stocks in the positive region Lupin (+1.14%) and Glaxo (+1.04%). And the worst performing stock is Cadila Healthcare (-3.90%)

1.24 pm: CNX Energy is up by +2.47%. Leading the index is BPCL (+6.69%), IOC (+5.07%) and R power (+4.72%).Meanwhile the laggards are CAIRN (+2.31%), GAIL (+0.49%), ONGC (+0.29%)

1.21 pm: EXPERT SPEAK: Ankit Aggarwal, director, Alankit Group

"With the changing government and clear majority, the market will boom like anything. If the development of the country happens at a faster way, market also has to respond in the same manner. Overall, the market condition should be very good for the investors," he says.


1.20 pm: Defensives like IT, FMCG and Pharma amongst the losers in the index stocks. Dr. Reddys (-2.5%), Infosys (-2.4%), Wipro (-2%), ITC (-1.88%), HUL (-1.4%), Cipla (-1.34%)


1.06 pm: Rupee has appreciated to 58.84 (up 0.45) levels vis a vis the US Dollar today.

According to Naveen Mathur, Associate Director Commodities and Currencies at Angel Broking, this is infact the immediate impact of the elections results and will stabilise at 57-58 levels. Over the medium term i.e. over the next 6 months, Mathur expects the rupee to move to 54-55 to the dollar, subject to expectations being met by the new government.

1:05 pm : Volumes on the BSE within the equity segment has shot-up by 42% to Rs 4,584.46 crores


EXPERT SPEAK: Sankaran Naren, chief investment officer, ICICI Prudential AMC

He believes the election results 2014 are far ahead of all the exit poll expectations.

"Post 1984, this is the first time a single party is getting almost absolute majority. This is an extremely positive structural move for the potential returns in the equity markets. It is also positive for a drop in interest rates over the next 18 months. Hence, it is extremely important for investors to consider investing in equities. Currently, domestic investors are extremely under-invested in equities and we believe they should allocate to equities even today. We believe that banking, infrastructure and mid-caps are likely to outperform the large caps, which does not mean that large caps will not be in a position to give returns. With regards to fixed income, investors should consider moving out of all defensive fixed income products to much more aggressive ones."



1:00 pm: While the CNX FMCG is in the red, despite being a defensive sector. The stocks in the green are Rasoya Proteins (+1.74%); MCDOWELL-N (+1.62); GODREJCP (+1.04); EMAMILTD (+1.41); JUBLFOOD (+1.18); TATAGLOBAL (+0.90); MCLEODRUSS (+0.58); GSKCONS(+0.16)

12:54 pm : Within the index CNX Bank the worst performing stock is HDFC and even that is in the positive terrain (+5.86%)

12.45 pm: After the initial run (till 10:15 am), when the Sensex crossed 25,000-mark, the market has seen profit booking and is currently range bound around 24,700.

12.32 pm: Small cap majors are doing well. PMC Fincorp, Amtek Auto and PTC India jumped 3.64% to Rs 795, 1.49% to Rs 183.90 and 6.98% to Rs 75.10, respectively.

12.31 pm: A real estate company has also now joined the league, infact heading the gainers list. IndiaBulls up 15.96%.

12.21 pm: IT and Healthcare stocks are looking under pressure. CNX IT and CNX Pharma are down by 0.64% and 0.26%, respectively, against their previous close.

12.02 pm: Volumes in the derivatives segment has gone down. Turnover was Rs 9,453.92 crore on Thursday. Today, it's Rs 1,560.46 crore as of 12.00 pm.

11.56 am: Defensives, that were the darling of the market till now are on the backfoot now. Financial Tech (-4.47%); Oracle Fin (-2.56%); Dr Reddys Lab (-2.41%); Dabur India (-2.08%); Biocon (-1.82%)

11.54 am: Adani and Finance lead the markets: REC (+14.98%); Andhra Bank (+14.01%); Adani Enter (+13.75%); Canara Bank (+13.22%); Power Finance (+13.21%)

11.53 am: In CNX Nifty five stocks are trading in red. Dr Reddy, Tech Mahindra, Cipla, Infosys and Wipro down 2.52%, 0.99%, 0.90%, 0.88% and 0.42%, respectively.

11.45 am: Sensex pares its early gains. It declined 2.28% to 24,785.98 from its level at 10 am.


Taher Badshah, senior VP and co-head of equities Motilal Oswal AMC says, "Markets could pause for a while but have enough legs to move up further over the next few months. We could see much higher action in midcaps from hereon."

11.33 am: EXPERT SPEAK: Killol Pandya, Senior Fund Manager, Debt- LIC Nomura Mutual Fund

"As of now, the results are strongly indicating that NDA is set to form the new government. BJP seems to be having a remarkable run with it leading by itself in more than the half way mark. While the markets (esp the equity market) is cheering on the apparent sweep by NDA, I am more relieved that India has given a consolidated mandate and this will lead to a relatively higher political stability in India... Going ahead, we can hope for decisive action from a strong central government. This may because of cheer to FIIs etc who have been worried about political instability in India. However, the macro economic factors may continue to weigh on sentiment once the election euphoria calms down. With the global geo-political environment being sensitive and domestic factors such as inflation and monsoon worrying investors, investors may do well to contain their enthusiasm and proceed cautiously as of now.

11.04 am: Sensex erases some early gains, trading at 24,859, down from a high of 25,364.

10:55 am: Of the 50 stocks comprising the Nifty HCLTech (-0.76%), DR Reddy (-1.26%), TCS (-1.49%), Infosys (-1.68%), Tech Mahindra (-2.04%) and Wipro (-2.18%) are laggards.

10.42 am: ICICI Bank is currently trading at Rs1523.95, up by Rs 130.85 or 9.39% from its previous closing of Rs 1393.10 on the BSE.


10.30 am: EXPERT SPEAK: Gnanasekar Thiagarajan, Director, Commtrendz

He believes, positive election outcome can impact commodity market in many ways -

1. As Narendra Modi is seen as industry friendly person, he could be favouring industries and interest rate cuts are expected.
2. Since rupee has appreciated strongly and expected to appreciate more, gold import curbs could be removed sooner than expected.

10:28 am: Nifty loses steam, is up only 4.14%

10:25 am: Top 3 losers Financial Tech (-4.22%); Divis Lab (-2.11%) and Infosys (-2.08%)

10.14 am: Banking stocks such as Canara Bank and Indian Bank jumps 20% and 14.32%, respectively, to Rs 400.95 and Rs 82.10. From the sectoral indices, BSE Bankex is among the top performers with 9.39% gain at 17,808.78.

10.10 am: BSE Sensex up 5.32% at 25,176. Other major indices, BSE 100 and BSE 200, up 5.51% and 5.19%, respectively.

10.13 am: Among the sectoral indices, Bank Nifty is leading with 9.85% up followed by CNX Auto 6.02%

10:05 am: EXPERT REACTION: Amar Ambani, Head of Research, IIFL

"Trend seems to suggest that BJP is trending closed to 270 seats, which means they may not have to take any outside support, hence making it an extremely stable proposition and allowing a free hand in policy making... Market participants were expecting a Nifty level of 7200 with a whiff of 7500 amongst a few with positions being built up on the long side at 7800... Given where it is, people may fear the market is overvalued, however a big correction is highly unlikely. In terms of valuations we are still at 14.5x Price to earnings, far from market peak valuations of 21 to 22x PE during a period of euphoria... Nifty could cross 8000- to 8200-levels in the coming few months, which is closer to its fair value and given the kind of verdict we are expecting. Once election dust settles two things will drive the market going forward, how the economy is doing and what is happening to global fund flows.""PSU Banks have gained a lot more considering a favourable election outcome raises expectations of greater autonomy for PSU Banks, recapitalisaition as well as divestment hopes. These banks are also trading at extremely cheap valuations i.e. 0.5-0.6 book value with dividened yields of 5-6 per cent."


9:58 am: Defensives on backfoot -- losers of the market. Berger Paints -3.09% ; Financial Tech -2.11% ; Divis Lab -2.02% ; Dr Reddys Lab -1.35% ; Glenmark Pharma -1.03%

9:52 am: Nifty up 5.44 per cent

9:49 am: Sensex is 5 per cent up

9.36 am: Sensex hits 25000 for the first time its life time high

9.35 am: Anutosh Bose, chief operating officer, LIC Nomura Mutual Fund, says, "'A sturdy government taking steps towards administrative reforms, kick-starting the stalled projects (the so called low hanging fruits) and initiation of a few key infrastructure projects, and we will have investors around the world focusing back on India in hordes."


9.35 am: Yes Bank up 11 per cent at 581.50, IOC and Power Finance Corp up 10% each at. Share price of Adani Enterprises jumped by Rs 32.05, or 6.51%, to Rs 532.75 against its previous close. Adani Port and Special Economic Zone and Adani Power were also trading 4% and 4.5% higher against their previous close.

9.34 am: Indian Bank up 17 per cent at 163.50

9.33 am: Canara Bank up 22 per cent at 408

9.30 am: Early trends show NDA is likely to form government at the Centre. The key benchmark index Sensex is at 24845.07, up 917.19 points against its previous close. Nifty is at 7403.30, up 280.15 points against its previous close.

9.27 am: Punjab National Bank stocks up 10 per cent at 939

9:20 am: Dr Reddy is the only stock among the 30 forming the SENSEX that is in red (-0.99 per cent)

9:17 am: Yes Bank at 574.90 up +9.85

9.15 am: BSE Sensex hits new record high of 24,930.42, surges 1,024.82 points; Nifty breaches 7,400 for the first time in opening tradeHis major fear was if Modi doesn't come to power the stock market will see a free fall. Most importantly, the rupee will fall close to 70 per dollar following an outflow from foreign institutional investors. If that happens, it will have a contagion effect with the greatest fears for India being a downgrade by rating agencies. India is just one notch above the junk status. A downgrade would mean losing its investment-grade rating and no money coming into the liquidity driven equity market. FII flows remain key to India and its capital markets. Rating agency Moody's has clearly indicated it would downgrade India if it doesn't see a stable government at the centre. A fragmented government without either a clear mandate or policy platform would heighten the downside credit risk.
In the current scenario, however, the fear seems to be unwarranted and a downgrade doesn't look likely. Looking at the economic numbers one would feel the fear of a downgrade has receded with the current account deficit and fiscal deficit under control and the rupee stable. This along with export income improving, import declining as well as inflation falling to an eight-month low augurs well for India. On the currency front, the Reserve Bank of India (RBI) has done a remarkable job with strong foreign exchange reserves ($292 billion) as well as allowing domestic banks to raise foreign currency non-resident deposits up to $30 billion. The RBI is also keeping a close watch on the US by keeping favourable interest rate differential among both nations such that flows into India remain intact. The new Fed chief's statement that interest rates will not be raised in the medium term has brought comfort to the market.
Today, barring a stable government at the center  all factors that could pull down the market - increase in US interest rates, uncontrolled deficit and drop in FII inflows -- have taken a back seat.
So, why is Modi important for the market? There is a feeling that the National Democratic Alliance (NDA) is pro-business, and therefore everyone wants Modi to come to power as they think he will replicate the Gujarat growth model in the country. This is the reason why most companies have stalled their investment spends as they don't have the confidence in the current system.
One wonders why it took 10 years for businessmen to realise that the NDA is pro-business. You can call it luck that played a huge role in the United Progressive Alliance (UPA) governing India for the past 10 years. After the UPA came to power in 2004, India saw its biggest ever bull-run for the next five years and it also enjoyed the multiplier effect of work that the previous government had done in terms of infrastructure and growth. In fact, in May 2009 after the UPA emerged victorious, the Sensex rose 20 per cent in a single day on the hope that reforms will take forefront, but the UPA's second stint was marred by corruption and scams, and reforms and growth took a back seat.
Today, the government machinery is in a deadlock. The market wants a government that is pro-reforms. It is not that Modi has a magic wand that can bring growth from day one. It will take at least 12 to 18 months for the economy to come back on track, but hopes are if Modi comes to power he will start on a clean slate and will have no baggage like the UPA, which will help him to drive economic reform and growth. Though the market is hoping for Modi to come into power, Modi or not, a stable government at the centre will emerge as a key catalyst for the market.

Gayle's record double century flattens Zimbabwe Stock market

 Chris Gayle rediscovered his mojo in spectacular fashion on Tuesday with the first ever World Cup double century to drive West Indies to a 73-run victory over Zimbabwe in their Pool B clash at Manuka Oval.The opener's 215 was the highest individual innings in a World Cup match, the third highest in any one-day international, and formed the large part of a 372-run partnership with Marlon Samuels (133 not out), also an one-day record.The dreadlocked 35-year-old slugged 16 sixes -- tying the one-day record -- as well as 10 fours in his 147-ball knock and even though he was dismissed with the last ball of the innings, West Indies were set fair at 372 for two.

Zimbabwe had their run-chase trimmed to 363 from 48 overs under the Duckworth-Lewis method after rain briefly interrupted the contest and they initially made a good fist of it.Brendan Taylor was unfortunate to be dismissed for 37 after a controversial third umpire referral and middle order batsmen Sean Williams (76) and Craig Ervine (52) also put in good shifts.When Gayle (2-35) returned with the ball to dismiss Ervine and Stuart Matsikenyeri (19) with his off-spin, however, the writing was on the wall for Zimbabwe and they were all out for 289 in the 45th over.

After starting their campaign with an embarrassing upset at the hands of Ireland, West Indies look on course for a place in the quarter-finals after impressive wins over Pakistan and now Zimbabwe.The match had started well for the Africans with Tinashe Panyangara bowling Dwayne Smith for a duck on the second ball and coming within a whisker of dismissing Gayle lbw in the same over.

Gayle, under fire after a poor run of form, made the most of the reprieve even if the stifling of his aggressive instincts meant his 22nd one-day century was by no means the most fluent of his career.Once he reached the milestone with the first ball of the batting power play, however, he punished the Zimbabwean bowlers as only he can, smashing the ball around the ground almost at will.

Conclusion

We've introduced many topics in this tutorial: 

• Investing is about making your money work for you.
• Reinvesting your earnings allows you to take advantage of compounding.
• Each investor is different in his or her objectives and risk tolerance.
• There isn't just one strategy that can be used to invest successfully.
• Each investment vehicle has its own unique characteristics.
• Diversifying investments in a portfolio helps to manage risk.

Together, all these points make up a foundation of knowledge with which any investor should be comfortable. However, these concepts mean nothing unless you can put them into practice. It's great to know that compounding accelerates your investment earnings, but the real question is how do you take advantage of compounding and actually make money? In this section we'll go over an example that demonstrates how to put all of what you've learned into action. 

The Strategy 
For our example, let's look at a fictional investor named Melanie. Melanie is a twenty-something who is relatively new to investing. Melanie knows that she wants to invest, but isn't sure just how to do it. Her knowledge of finances is good, but she has no desire to spend her free time poring over financial statements (or losing sleep because of her investments). 

After checking out this tutorial and reading more about stocks and mutual funds, Melanie learns that there are two basic styles of portfolio management:passive and active. Each of these styles results from a different approach to the market. The goal of active management is to select securities that will perform better than the overall market. For example, when a mutual fund manager analyzes a company's financial statements to determine if the stock is suitable for the fund, he or she is actively managing the portfolio. 

A passive investor on the other hand has no desire to try to beat the market. Instead, relying on the stock market's history of increasing over the long term, the passive investor, perhaps believing that trying to beat the market is too much work or even futile, will simply purchase a security such as an index fund, which mirrors a benchmark used to track the performance of a market. 

Melanie decides that passive investing is more her style, so her investment vehicle of choice is the S&P 500 index fund. This is a mutual fund that is indexed to the S&P 500, which is composed of the 500 largest companies in the U.S. 

Why an index fund? 

• Buying an index fund is passive investing, so Melanie is still free to have a life and doesn't have to worry about picking stocks.
• Melanie gets instant diversification (because the fund owns many different kinds of stocks) without having to invest huge sums of money. Most index funds can be set up with an investment of $1,000 or less.
• Most importantly, the fees are far less than the cost of the average mutual fund. These lower fees are another advantage of passive investing. Because the fund does not have to pay some hotshot (and expensive) MBA fund manager to pick stocks, an index fund is often cheaper than any other mutual fund. (For more on this, see the Index Investing tutorial.)

Melanie doesn't just stop with her initial purchase. She uses an automatic payment plan with which she invests 10% of her paycheck every month. Investing a fixed amount every single month makes use of dollar cost averaging. By putting in, say, $100 each month (rather than a large amount once a year), Melanie sometimes buys when the prices of the units of the fund are higher, and sometimes when prices are lower. In the end, the purchase prices average out. The best thing about dollar cost averaging, though, is that it gets Melanie into the habit of saving every single month. Just about any fund company or bank will let you invest like this with an automatic payment plan. 

Putting the Concepts to Work
And that's about all there is to it. It's pretty simple stuff, actually. And despite the ease of setting up a strategy like this, it allows Melanie to follow all the principles we've been discussing: 

• Her money is definitely being put to work, and she is becoming part owner of the 500 biggest companies in the U.S.
• With no additional work on her end, she can reinvest all the money that gets paid out in dividends, which allows her to see the benefits of compounding over time, even more so if she sets this fund up in a retirement plan that allows her investment to grow without being taxed immediately
• It's easy! This fits Melanie's preference to avoid the work of picking stocks. Those who do want to develop an eye for stocks, however, can get started with an index fund and then eventually work their way into more active strategies over time. (For further reading, see Guide to Stock Picking Strategies.)
• A strategy like this can be molded to meet an investor's objectives and asset allocation. In Melanie's case, she has a time horizon of more than 20 years, so she is comfortable being completely in equities. If an investor is not comfortable with being just in stocks, it's easy enough to buy a bond index fund. It would still offer the low costs of indexing, and allow you to customize your asset allocation. (For more on this, see Being Lazy With A Couch Potato Portfolio.)
• Please remember the above points are not meant to give you personal advice. We've already talked about how there is no one-size-fits-all approach. The point of this example is to give you a more tangible look at how an investor might implement the ideas discussed in this tutorial. 

nternational diversification of investment portfolios

The Portfolio
A portfolio is a combination of different investment assets mixed and matched for the purpose of achieving an investor's goal(s). Items that are considered a part of your portfolio can include any asset you own - from real items such as art and real estate, to equities, fixed-income instruments and their cash and equivalents. For the purpose of this section, we will focus on the most liquid asset types: equities, fixed-income securities and cash and equivalents.
An easy way to think of a portfolio is to imagine a pie chart, whose portions each represent a type of vehicle to which you have allocated a certain portion of your whole investment. The asset mix you choose according to your aims and strategy will determine the risk and expected return of your portfolio.
Basic Types of Portfolios
In general, aggressive investment strategies - those that shoot for the highest possible return - are most appropriate for investors who, for the sake of this potential high return, have a high risk tolerance (can stomach wide fluctuations in value) and a longer time horizon. Aggressive portfolios generally have a higher investment in equities.
The conservative investment strategies, which put safety at a high priority, are most appropriate for investors who are risk averse and have a shorter time horizon. Conservative portfolios will generally consist mainly of cash and cash equivalents, or high-quality fixed-income instruments. 

To demonstrate the types of allocations that are suitable for these strategies, we'll look at samples of both a conservative and a moderately aggressive portfolio.

Note that the terms cash and the money market refer to any short-term, fixed-income investment. Money in a savings account and a certificate of deposit (CD), which pays a bit higher interest, are examples.
The main goal of a conservative portfolio strategy is to maintain the real value of the portfolio, or to protect the value of the portfolio against inflation. The portfolio you see here would yield a high amount of current income from the bonds and would also yield long-term capital growth potential from the investment in high quality equities. 

A moderately aggressive portfolio is meant for individuals with a longer time horizon and an average risk tolerance. Investors who find these types of portfolios attractive are seeking to balance the amount of risk and return contained within the fund. 
The portfolio would consist of approximately 50-55% equities, 35-40% bonds, 5-10% cash and equivalents. 


You can further break down the above asset classes into subclasses, which also have different risks and potential returns. For example, an investor might divide the equity portion between large companies, small companies and international firms. The bond portion might be allocated between those that are short-term and long-term, government versus corporate debt, and so forth. More advanced investors might also have some of the alternative assets such as options and futures in the mix. As you can see, the number of possible asset allocations is practically unlimited. 
Why Portfolios? 
It all centers around diversification. Different securities perform differently at any point in time, so with a mix of asset types, your entire portfolio does not suffer the impact of a decline of any one security. When your stocks go down, you may still have the stability of the bonds in your portfolio. 

Types Of Investments

We've already mentioned that there are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective.

Bonds 
Grouped under the general category called fixed-income securities, the termbond is commonly used to refer to any securities that are founded on debt. When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out.
The main attraction of bonds is their relative safety. If you are buying bonds from a stable government, your investment is virtually guaranteed, or risk-free. The safety and stability, however, come at a cost. Because there is little risk, there is little potential return. As a result, the rate of return on bonds is generally lower than other securities.
Stocks
When you purchase stocks, or equities, as your advisor might put it, you become a part owner of the business. This entitles you to vote at the shareholders' meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends.
While bonds provide a steady stream of income, stocks are volatile. That is, they fluctuate in value on a daily basis. When you buy a stock, you aren't guaranteed anything. Many stocks don't even pay dividends, in which case, the only way that you can make money is if the stock increases in value - which might not happen. Compared to bonds, stocks provide relatively high potential returns. Of course, there is a price for this potential: you must assume the risk of losing some or all of your investment. 

Mutual Funds
A mutual fund is a collection of stocks and bonds. When you buy a mutual fund, you are pooling your money with a number of other investors, which enables you (as part of a group) to pay a professional manager to select specific securities for you. Mutual funds are all set up with a specific strategy in mind, and their distinct focus can be nearly anything: large stocks, small stocks, bonds from governments, bonds from companies, stocks and bonds, stocks in certain industries, stocks in certain countries, etc.
The primary advantage of a mutual fund is that you can invest your money without the time or the experience that are often needed to choose a sound investment. Theoretically, you should get a better return by giving your money to a professional than you would if you were to choose investments yourself. In reality, there are some aspects about mutual funds that you should be aware of before choosing them, but we won't discuss them here.
Alternative Investments: Options, Futures, FOREX, Gold, Real Estate, Etc.
So, you now know about the two basic securities: equity and debt, better known as stocks and bonds. While many (if not most) investments fall into one of these two categories, there are numerous alternative vehicles, which represent the most complicated types of securities and investing strategies.

Contradictions

An important fact about investing is that there are no indisputable laws, nor is there one correct way to go about it. Furthermore, within the vast array of different investing styles and strategies, two opposite approaches may both be successful at the same time. 

One explanation for the appearance of contradictions in investing is that economics and finance are social (or soft) sciences. In a hard science, like physics or chemistry, there are precise measurements and well-defined laws that can be replicated and demonstrated time and time again in experiments. In a social science, it's impossible to "prove" anything. People can develop theories and models of how the economy works, but they can't put an economy into a lab and perform experiments on it.

In fact, humans, the main subject of the study of the social sciences are unreliable and unpredictable by nature. Just as it is difficult for a psychologist to predict with 100% certainty how a single human mind will react to a particular circumstance, it is difficult for a financial analyst to predict with 100% certainty how the market (a large group of humans) will react to certain news about a company. Humans are emotional, and as much as we'd like to think we are rational, much of the time our actions prove otherwise. 

Economists, academics, research analysts, fund managers and individual investors often have different and even conflicting theories about why the market works the way it does. Keep in mind that these theories are really nothing more than opinions. Some opinions might be better thought out than others, but at the end of the day, they are still just opinions.

The answer is neither. Sally and John have totally different investing strategies, but there is no reason why they can't both be successful. There are plenty of stable companies out there for John, just as there are always entrepreneurs creating new companies that would attract Sally. The approaches we described here are those of the two most common investing strategies. In investing lingo, Sally is a growth investor and John is a value investor. Take the following example of how contradictions play out in the markets: 

Sally believes that the key to investing is to buy small companies that are poised to grow at extremely high rates. Sally is therefore always watching for the newest, most cutting-edge technology, and typically invests in technology and biotech firms, which sometimes aren't even making a profit. Sally doesn't mind because these companies have huge potential. 

John isn't ready to go spending his hard-earned dollars on what he sees as an unproven concept. He likes to see firms that have a solid track record and he believes that the key to investing is to buy good companies that are selling at "cheap" prices. The ideal investment for John is a mature company that pays out a large dividend, which he feels has high-quality management that will continue to deliver excellent returns to shareholders year after year. 

So, which investor is superior? 

Taking Yourself decision

Investors can learn a lot from the famous Greek maxim inscribed on the Temple of Apollo's Oracle at Delphi: "Know Thyself". In the context of investing, the wise words of the oracle emphasize that success depends on ensuring that your investment strategy fits your personal characteristics.
Even though all investors are trying to make money, each one comes from a diverse background and has different needs. It follows that specific investing vehicles and methods are suitable for certain types of investors. Although there are many factors that determine which path is optimal for an investor, we'll look at two main categories: investment objectives and investing personality. 

Investment Objectives
Generally speaking, investors have a few factors to consider when looking for the right place to park their money. Safety of capital, current income and capital appreciation are factors that should influence an investment decision and will depend on a person's age, stage/position in life and personal circumstances. A 75-year-old widow living off of her retirement portfolio is far more interested in preserving the value of investments than a 30-year-old business executive would be. Because the widow needs income from her investments to survive, she cannot risk losing her investment. The young executive, on the other hand, has time on his or her side. As investment income isn't currently paying the bills, the executive can afford to be more aggressive in his or her investing strategies.
An investor's financial position will also affect his or her objectives. A multi-millionaire is obviously going to have much different goals than a newly married couple just starting out. For example, the millionaire, in an effort to increase his profit for the year, might have no problem putting down $100,000 in a speculative real estate investment. To him, a hundred grand is a small percentage of his overall worth. Meanwhile, the couple is concentrating on saving up for a down payment on a house and can't afford to risk losing their money in a speculative venture. Regardless of the potential returns of a risky investment, speculation is just not appropriate for the young couple.
As a general rule, the shorter your time horizon, the more conservative you should be. For instance, if you are investing primarily for retirement and you are still in your 20s, you still have plenty of time to make up for any losses you might incur along the way. At the same time, if you start when you are young, you don't have to put huge chunks of your paycheck away every month because you have the power of compounding on your side. 

On the other hand, if you are about to retire, it is very important that you either safeguard or increase the money you have accumulated. Because you will soon be accessing your investments, you don't want to expose all of your money tovolatility - you don't want to risk losing your investment money in a market slump right before you need to start accessing your assets.
Personality
What's your style? Do you love fast cars, extreme sports and the thrill of a risk? Or do you prefer reading in your hammock while enjoying the calmness, stability and safety of your backyard?
Peter Lynch, one of the greatest investors of all time, has said that the "key organ for investing is the stomach, not the brain". In other words, you need to know how much volatility you can stand to see in your investments. Figuring this out for yourself is far from an exact science; but there is some truth to an old investing maxim: you've taken on too much risk when you can't sleep at night because you are worrying about your investments.
Another personality trait that will determine your investing path is your desire to research investments. Some people love nothing more than digging into financial statements and crunching numbers. To others, the terms balance sheet,income statement and stock analysis sound as exciting as watching paint dry. Others just might not have the time to plow through prospectuses and financial statements. Putting It All Together: Your Risk Tolerance By now it is probably clear to you that the main thing determining what works best for an investor is his or her capacity to take on risk. 

The Concept Of Compounding

Albert Einstein called compound interest "the greatest mathematical discovery of all time". We think this is true partly because, unlike the trigonometry or calculus you studied back in high school, compounding can be applied to everyday life. 

The wonder of compounding (sometimes called "compound interest") transforms your working money into a state-of-the-art, highly powerful income-generating tool. Compounding is the process of generating earnings on an asset's reinvested earnings. To work, it requires two things: the re-investment of earnings and time. The more time you give your investments, the more you are able to accelerate the income potential of your original investment, which takes the pressure off of you.

To demonstrate, let's look at an example:

If you invest $100,000 today at 6%, you will have $106,000 in one year ($100,000 x 1.06). Now let's say that rather than withdraw the $600 gained from interest, you keep it in there for another year. If you continue to earn the same rate of 6%, your investment will grow to $11,2360.00 ($106,000 x 1.06) by the end of the second year.

Because you reinvested that $600, it works together with the original investment, earning you $636, which is $36 more than the previous year. This little bit extra may seem like peanuts now, but let's not forget that you didn't have to lift a finger to earn that $36. More importantly, this $36 also has the capacity to earn interest. After the next year, your investment will be worth $119,100.16 ($112,360 x 1.06). This time you earned $6741,66, which is $741,66 more interest than the first year. This increase in the amount made each year is compounding in action: interest earning interest on interest and so on. This will continue as long as you keep reinvesting and earning interest.

Starting Early
Consider two individuals, we'll name them Ram and shyam. Both Ram and shyam are the same age. When Ram was 25 she invested $15,000 at an interest rate of 5.5%. For simplicity, let's assume the interest rate was compounded annually. By the time Ram reaches 50, she will have $57,200.89 ($15,000 x [1.055^25]) in her bank account.

Ram's friend, Shyam, did not start investing until he reached age 35. At that time, he invested $15,000 at the same interest rate of 5.5% compounded annually. By the time Shyam reaches age 50, he will have $33,487.15 ($15,000 x [1.055^15]) in his bank account.

What happened? Both Ram and shyam are 50 years old, but Ram has $23,713.74 ($57,200.89 - $33,487.15) more in her savings account than Shyam, even though he invested the same amount of money! By giving her investment more time to grow, Ram earned a total of $42,200.89 in interest and Shyam earned only $18,487.15. 

What Is Investing? why investing?

It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And that's exactly what most of us do. There's one big problem with this: if you want more money, you have to work more hours. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we don't have the leisure time to enjoy it You can't create a duplicate of yourself to increase your working time, so instead, you need to send an extension of yourself - your money - to work. That way, while you are putting in hours for your employer, or even mowing your lawn, sleeping, reading the paper or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job.

There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which we'll discuss in a later section of this tutorial. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept for you to understand. 

Investing is not gambling. Gambling is putting money at risk by betting on an uncertain outcome with the hope that you might win money. Part of the confusion between investing and gambling, however, may come from the way some people use investment vehicles. For example, it could be argued that buying a stock based on a "hot tip" you heard at the water cooler is essentially the same as placing a bet at a casino.

True investing doesn't happen without some action on your part. A "real" investor does not simply throw his or her money at any random investment; he or she performs thorough analysis and commits capital only when there is a reasonable expectation of profit. Yes, there still is risk, and there are no guarantees, but investing is more than simply hoping Lady Luck is on your side.

Why Bother Investing?
Obviously, everybody wants more money. It's pretty easy to understand that people invest because they want to increase their personal freedom, sense of security and ability to afford the things they want in life.

INTRODUCTION

Do you want to  start investing

If you answered "yes" to any of the above questions, you've come to the right place. In this tutorial we will cover the practice of investing from the ground up. The world of finance can be extremely intimidating, but we firmly believe that the stock market and greater financial world won't seem so complicated once you learn some of the lingo and major concepts.

We should emphasize, however, that investing isn't a get-rich-quick scheme. Taking control of your personal finances will take work, and, yes, there will be a learning curve. But the rewards will far outweigh the required effort. Contrary to popular belief, you don't have to let banks, bosses or investment professionals push your money in directions that you don't understand. After all, no one is in a better position than you are to know what is best for you and your money.

Regardless of your personality type, lifestyle or interests, this tutorial will help you to understand what investing is, what it means and how time earns money through compounding. But it doesn't stop there. This tutorial will also teach you about the building blocks of the investing world and the markets, give you some insight into techniques and strategies and help you think about which investing strategies suit you best. So do yourself a lifelong favor and keep reading.

One last thing: remember: there are no "stupid" questions. If after reading this tutorial you still have unanswered questions, we'd love to hear from you. 

Various factor influence on SENSEX

Movements in SENSEX are the result of a complex interplay of a host of factors. Hence, it is not easy to make a correct assessment of its movement, and the task becomes all the more difficult when SENSEX witnesses a lot of volatility. Macroeconomic factors do have a lot of influence on the SENSEX movements. The objective of this study is to investigate several key macroeconomic factors and their influence on SENSEX variations. For this purpose, key macroeconomic parameters like Balance of Trade, Index of Industrial Production, Money Supply (M3), MIBOR Rates, FOREX Reserves, Wholesale Price Index based inflation and exchange rates between Rupee-Dollar and Rupee-Euro were considered to investigate the key factors amongest them which are influencing most the SENSEX variations. The study uses monthly data for past ten years (i.e. from 2001 to 2010), analyzed using Vector Auto regressive techniques. 

The findings of the research identified three macroeconomic indicators, viz. MIBOR, FOREX reserves and INR/USD exchange rates, as having a significant impact on the SENSEX returns. Other macroeconomic indicators considered in our study were found to have no significant impact on the SENSEX returns. These findings are expected to help fundamental analysts and other market players to watch out for these variables while making investment decisions.

Stock market indices are the barometers of the stock market. They mirror the stock market behavior and the broad trends in the market. There are large number of companies listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) and it is not possible to look at the prices of every stock to find out whether the market movement is upward or downward. The indices like BSE Sensex (Sensitivity Index) and S&P CNX Nifty (NSE 50 Index) give a broad outline of the market movement and represent the market. The main criteria for selection of the scrips to be included in the indices are: market capitalization, liquidity, and proper representation of all industries in the economy. The base year for BSE Sensex is 1978-79 while for S&P CNX Nifty it is November 1995.

There are several fundamental, non-fundamental, and technical factors, which influence the market price of the scrips constituting the index and thereby have a bearing on the behavior of the entire market. There are different variables, which assume greater significance in different years depending on the prevailing economic and stock market conditions. The main problem is to identify the major variables in the form of factors, which have significant bearing on the movement of the Sensex, which is the most comprehensive representative of the Indian stock market.

Events that influenced Indian markets in 2014

Much of this has been caused by some key events that took place this year. Here is a look at seven of the most important events that affected the economy in 2014:

1. New government: The year saw a regime change for the government. The Bharatiya Janata Party won the elections with a whopping majority after a successful election campaign that highlighted the need for reforms. Markets too jumped on hopes that the new government would pass reforms required to get the economy back on the growth path. On the day of the election results, the Sensex jumped over 1000 points. By the time the new government led by Prime Minister Narendra Modi took oath, the Sensex went to 24,700 from 22,300 levels.

2. New reforms: The new government set to task immediately after forming government. It announced changes to the labour laws – some of which were decades old; allowed more foreign investment in sectors like infrastructure and real estate; changes in pension rules; announced new insurance rules as well as the much-awaited Goods and Services Tax. Some of these are pending approval in the Lok Sabha.

3.Coal block cancellations: This was perhaps one of the most surprising developments in the year. In September, the Supreme Court cancelled 214 coal blocks, which were allotted between 1993 and 2011. It gave the companies six months to return the blocks to the state-owned Coal India. Metal stocks fell sharply as a result of the announcement. Jindal Steel and Power was the most affected, losing around eight mines. The government now plans to auction the blocks in a fresh round. This is expected to take place in February 2015.

4.Fall in inflation: Inflation has been one of India’s biggest problems. It remained elevated for a long period of time, often growing at a rate over 10%. This year brought cheer on this end too. Inflation fell the entire year to new multi-year lows. Wholesale price inflation grew 0% in November, while retail inflation grew 4.4%, as per the latest data. This has been predominantly because of a fall in global oil prices. Food inflation, which grew 15.4% in November 2013, is down to 3.1% in the same month in 2014. This is good news, as high inflation eats into the value of money. A continuous fall in inflation also could open doors for a cut in interest rates by the Reserve Bank of India. This could help spur growth.

5.Diesel deregulation: The Indian government sub sidises fuel prices. It compensates the fuel-selling companies for their loss. This, in turn, increases the government’s expenditures. In 2014, the government decontrolled diesel prices, allowing companies to sell oil at market prices. This was possible mainly because international prices remained low. As a result, companies announced a cut in diesel prices after the deregulation. Diesel cost Rs 54.34 in New Delhi and Rs 62.6 in Mumbai per liter at the start of the year. It now costs Rs 50.51 in Delhi and Rs 57.91 per liter in Mumbai.

6.End of quantitative easing: In May 2013, the US Federal Reserve announced its intentions to cut down its bond purchases, called the Quantitative Easing program. The US central bank infused money into the US markets through this program. This money found its way into riskier emerging markets like India. The announcement led to market crashes around the world. The Indian market was the most affected. 2014 has seen a reversal of this effect. The US central bank slowly reduced its bond purchases to finally end the program in October this year. Despite that, foreign investors continued investing in India as the underlying economy and fundamentals improved. The US central bank also indicated it may hike interest rates next year.

7.Oil prices fall: Prices of crude oil in the international markets is trending at $60 per barrel. This is down from $110/barrel-levels at the start of the year. A key reason for this fall has been the reduction in imports by the US. America has now become the largest producer of oil even though it does not export. As import demand for oil falls, prices trend lower. This $50 fall has benefited India, which imports nearly 70% of its oil needs every year. However, whenever the price of oil falls, the US dollar rises against other currencies. As a result, the rupee rose to Rs 63/$-levels again in December.

Why do people say that investing money in stock market is similar to gambling

Because most investors have a very limited knowlege of how financial markets work. The stock market clearly had volatility. Yet is is nothing like gambling in a casino. Those that understand how asset classes correlate understand that for most people not having any exposure to the market is the real gamble. In reality there is no such thing as a risk less place to hold money. If you sit in cash you have inflation risk. If you own only fixed income you have both some inflation risk as well as interest rate risk. The stock market has more principal risk. 

In both gambling and investing in the Stock Market, you can lose the money you put in. And if you are trading stocks over the very short term, most of the money you make is from "random" unpredictable fluctuations in prices, a bit like gambling.

But there are also important differences. If you invest in the stock market for the long term you would expect that the companies you own a stake in would make profits and share some of that with you - not true with gambling. In gambling, over the long term, the "house" always wins.

the stock market is very volatile and returns cannot be guaranteed. A person can do tons of research, and investigation on a good stock and still it can drop like a stone due to unforeseen circumstances.

The people who made this statement do not understand the stock market. All they know about stocks is that money can be made or lost.

In the stock market you can search for profitable companies that have scope for growth and which are selling at bargain prices.

The greatest difficulty is to determine the intrinsic value of the company. Once this is done, compare it with the present market price. If market price is two thirds or less of intrinsic value, you have a bargain stock which has great growth potential.

Gambling gives less edge over the system.