Trading rules in stock market for beginners

trading rules for beginners
Whether you enter the market with a trading mindset or an investing mindset, you cannot deny the fact that you want to make money fast and get rich as quickly as possible. You are also unsure about your attitude, whether you are made for trading or investing or none of that, and how much return can be generated realistically from either investing or trading. 

Well you need to find those answers yourself by experiencing the markets and reading others but if you want to be a successful trader then following are some of the very important rules to remember. These trading rules are compiled from the saying of some of the most successful traders on earth.

National Savings Securities - Cumulative: The CPI indexed bonds

retail Inflation index bondsBonds indexed to retail inflation finally became reality in India after long wait. Following are the major highlights of the bond and it's merits and demerits.

National Savings Securities - Cumulative, is an inflation indexed bond which tracks consumer inflation and not wholesale inflation. 

These bonds seek to protect people's savings from price rise, by offering returns over and above inflation at the retail level (Consumer Price Inflation).

Portfolio update

Due to recent correction in Indian stock markets after making new high on 13th Dec 2013, some stocks have come down to attractive valuations and hence the today's (17th Dec) dip was utilized to buy into some quality names thereby allocating more than 50% of the idle cash that was there in the portfolio as on 4th Dec 2013.

Check out the following page for the updated portfolio: Amit Agarwal Model Portfolio

CPI Inflation at all time high

The retail price (CPI) index-based inflation jumped to an all-time high of 11.24%, driven primarily by high vegetable prices. The inflation stood at 10.09% in October, entering double digits for the first time  in six months. The biggest culprit was vegetables where the inflation zoomed to 61.60% in November against 45.67% in October. Overall, food and beverages  inflation rose to 14.72% from 12.56%  over  the period.

High retail as well as wholesale inflation could spoil the rally going on in equities as further rise in interest rate is inevitable. Economists think  that RBI would  tighten monetary policy further at  its review  next week.

Stock Markets in India all set to touch new high

With decisive win of BJP in 4 state elections, stock markets in India are going to be very joyful for at least couple of days if not couple of weeks on the hopes of them forming the govt in center after national election in 2014. 

This coupled with the fact that Power grid FPO received tremendously positive response from retail investors also provides lot of comfort in the rally. Any further leg to the upward movement in Sensex or nifty have to be supported by retail investors which seems to been reappearing since past couple of months. Mid and small cap stocks with low ticker price will surely get active in coming months if market stays comfortable at higher levels. 

Given the fact that Powergrid FPO sucked in more than 40000 crores from the market which was largely the money pulled from secondary market, once the FPO shares are listed around 3rd week of December the additional 35000 crores, which were blocked in the FPO, will get reinvested in secondary market which could propel the markets even higher.

Sectors that might outperform:

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