SHARETIPSINFO >> Articles Directory >> Short Selling & Selling Stocks in Indian stock market
Have you ever come across with the concept called, ‘short selling?’ If you wish to invest in the stock market, then it is very important that you know each and every concept of the stock market. Well it means the sale of shares that the seller does not own when he trades.
There are critics that are of the view that this type of selling poses potential risks. Do you think that this concept has been introduced in the Indian stock market for the first time? If you thought that way, then you are very wrong as this concept was prevalent till 2001. It was in 2001 when the Sebi banned this type of selling when the prices crashed in the same year. Do you think why do investors undertake this type of selling? Well investors invest in this type of selling mainly for two reasons. Now let us study the two reasons.
- The investor goes for this concept when they feel that the price of a stock in overvalued. They therefore go short on that particular stock and expect the prices to come down. So, short-sellers hope to purchase back the stock at a much lower level.
- The second reason why traders too go for this concept is because when they come to know that the price of a stock is higher than the price of the future (derivatives.)
But in the Indian market, investors cannot do this even but they can do arbitrage provided the spot prices are lower than the futures. This means that the investors can buy in cash as well as sell in the derivatives segment. So Sebi helps to remove this distortion by introducing this concept of selling. If you wish to know more about this, then you should always make a search on the Internet where you could get share tips as well. You should also learn more about stock market concepts like BSE, NSE, NASDAQ…etc in order to gain more knowledge on the market.
So, you should make a good research on short selling if you wish to invest in the stock market. You should however be fully prepared to face the risk that would arise in the market.
When you invest in stocks, then you should be sure that you get a good return from the market. If you feel that it is not the right time to invest in the stock market, then you should never go for buying or selling stocks. You should know how stock market works and you should keep abreast about the Indian stock market.
Investing your money in the stock market
If yow wish to start investing your money in the stock market, then you must open a new account in your preferred brokerage. Yes, this is the most important thing you should do in order to buy or sell your stocks. Make sure that you always read the terms and conditions when you get the agreement form. You should also take some time to read it all and understand all the form in details. If it is your first time to invest in the market, then you should make sure that you invest in the stock market a very limited amount until you come to know about working of the system of the stock trading.
Be prepared to go for a risk
Everybody knows that investing in a stock market is something like taking a risk in your money. So, if you do not know the fundamentals of the stock market, it would be very hard to survive in this stock business. So, it is very important that you get the proper knowledge about the stock market and you should never think of investing your money else you would end up losing all your hard earned money. Remember that it always gives a better return to an investor when one invests wisely and carefully. Nobody can predict the market and so you cannot predict whether you can get good returns from the stocks that you have invested or you incur heavy losses in the stock market.
Get some help online
You should get some idea from the Internet. There are lots of websites where you can get to know how stock market functions. If you get to know that the market is unstable and the prices are rising, then that would be an ideal time to make a huge profit by selling stocks. So get some knowledge online about the stock market.
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