MARKET SUMMARY FOR 8 MAY 2015

FUTURE:

"BUY AXISBANK ABOVE 546 TGT 552.00 SL 541.00"

"BUY TATAMOTORS ABOVE 515 TGT 525.00 SL 503.00"

Sensex up 506 pts, Nifty ends above 8150 Banks, auto and capital goods fueled the fire with some strong support. Tata Motors up 5 percent remained top gainer. After falling sharply in last two trading sessions, the markets today opened on a strong note following the positive global cues. The BSE Sensex surged over 574 points to trade above the 27,000 level while the Nifty reclaimed the 8,200 mark in the afternoon trade today as funds and retail investors went about creating fresh positions, driven by the government’s decision to refer MAT issue to a high-level committee. Besides, a rebound in the rupee from the 20-month low also boosted sentiment. The rally was led by a strong showing in auto, realty, banking, capital goods, PSUs, FMCG, metal and IT stocks on fresh capital inflows. Punjab National Bank (PNB) disappointed street on Friday with the fourth quarter profit falling 61.9 percent year-on-year to Rs 307 crore, dented by lower net interest income. PNB falls by 6.57% today. After a stellar rally,  the Sensex ended up 506 points or 1.9 percent at 27105. The Nifty was up 134.20 points or 1.7 percent at 8245.  About 1865 shares have advanced, 835 shares declined, and 169 shares are unchanged. Banks and autos led the rally while Consumer Durables index was in red. Here are the stocks that kept traders busy today.

HOW TO LEARN ABOUT CANDLESTICK & ITS USES ?

FUTURE:

"SELL HAVELLS BELOW 280 TGT 270.00 SL 285.00"

CASH:

"SELL SRF LTD BELOW 916 TGT 895.00 SL 930.00"

What is a Candlestick ?

Candlesticks show the price movement in a certain period, by using the trading day’s open, high, low and close. A candlestick is composed of a box which is called the body, whose length is the difference between the open and close, and thin vertical lines that are called the shadows above and below the body, representing the high and low prices reached during the day. A bullish day with a closing price higher than the opening price is shown by a white (hollow) body; while a bearish day with a closing price lower than the opening is shown by a black body. The body becomes a short horizontal line when the opening and closing prices are equal. In this case the candlestick is called a Doji, which usually signifies indecision in the market.

Though single candlesticks convey valuable information about the changes in a market’s supply and demand balance, a succession of candlesticks taken together, are more pertinent for this purpose as they make a pattern. The superiority of candlestick patterns over other technical analysis tools in forecasting medium and particularly short term direction is proven. Forecasting with candlesticks requires the proper identification of more than eighty different patterns and a well behaved continuous set of data with no missing observations.

Why Candlesticks?

How to Determine Where to Set a Stop Loss

Many investors struggle with the task of determining where to set their stop loss levels. Investors don’t want to set their stop loss levels too far away and lose too much money if the stock moves in the wrong direction. On the other hand, investors don’t want to set their stop loss levels too close and lose money by being taken out of their trades too early.

So where should you set your stop losses?

Let’s take a look at the following three methods you can use to determine where to set your stop losses:

Whether you should go for future trading or option trading and what is the difference?

Future trading in the Indian stock market refers to the buying and selling of the stock futures of individual stock. If you have to buy one future of nifty (one future of nifty equals 200 nifty), you need to pay a margin between 25-50% depending upon the volatility of the index. For example, if you wish to buy future of DLF, then you need to buy 2000 DLF's, which is one lot size of DLF future. Any price movement (up or down) you either get profit or loss. The profits and losses are unlimited while buying or selling a future. When we buy an option i.e., a call or a put we only need to pay the premium and  that is the only risk we have. Options can be on the index as well as the stocks. Stock options are option on individual index. The buyer of an option pays the premium to the seller of the option. The buyer of an option is under no obligation to exercise his option but the seller of the option has to fulfill his obligation if the buyer demands For example, If you buy an index call option at a premium of Rs.20, then at the end of the month the maximum loss you can have is Rs.20, but the profit is unlimited where as the seller of the option will have maximum profit of Rs.20 only and his loss is unlimited. The seller of an option is also called an option writer. New investors and traders should not indulge in option writing or selling. An investor can buy a put option if he thinks that the market is going to go down. He has to pay only premium to the writer. The investors buys the put option which gives the investor the right but not the obligation to sell the stock at a later stage. The date specified at which the option has to mature is called the expiration date i.e.,  the last Thursday of the month. The price specified in the option contract is called the strike price. So a new investor is advised to buy call or put options rather than selling options or trading in future.

HOW DERIVATIVES USE IN STOCK MARKET

CALLS GIVEN ON 1^ST MAY

WOCKPHARMA CALL ROCKS..!!!!! ACHIEVED TGT AND MADE A HIGH OF 1471

AMTEKAUTO CALL ALMOST HIT THE TGT MADE A HIGH OF 163

1. What are derivatives? Derivatives, such as futures or options, are financial contracts which derive their value from a spot price, which is called the “underlying”. For example, wheat farmers may wish to enter into a contract to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction would take place through a forward or futures market. This market is the “derivatives market”, and the prices of this market would be driven by the spot market price of wheat which is the “underlying”. The term “contracts” is often applied to denote the specific traded instrument, whether it is a derivative contract in wheat, gold or equity shares. The world over, derivatives are a key part of the financial system. The most important contract types are futures and options, and the most important underlying markets are equity, treasury bills, foreign exchange, real estate etc.

2. What is a forward contract? In a forward contract, two parties agree to do a trade at some future date, at a stated price and quantity. No money changes hands at the time the deal is signed.

3. Why is forward contracting useful? Forward contracting is very valuable in hedging and speculation. The classic hedging application would be that of a wheat farmer forward -selling his harvest at a known price in order to eliminate price risk. Conversely, a bread factory may want to buy bread forward in order to assist production planning without the risk of price fluctuations. If a speculator has information or analysis which forecasts an upturn in a price, then he can go long on the forward market instead of the cash market. The speculator would go long on the forward, wait for the price to raise, and then take a reversing transaction making a profit.