* * * SENSEX, A sure way to Win *&* to Lose * * *. Review on General Tips on Sensex

Ramu had 10 cows. He used to milk the cows and sell the milk for his living. One day, Ramu's son-in-law told a very good idea. He (Arjun) went to the junction and circulated glorifying stories of Ramu's farm and cows. He made people believe that those cows are special and so is the milk. Earlier, Ramu used to sell the milk for Rs 15 per litre. Now, the milk was offered at Rs. 25/-. People who bought the milk in expectation got some effect of positive thinking or positive imaging and the news is flashed. There were only 100 Liters of milk available, but people were rushed with money for the milk and Ramu increased the price to Rs50/-.

People who bought the milk start selling it for higher prices and made quick money. Within 1 hour, the price of a liter milk increased to Rs 250. (By evening whoever possess the milk will either use it or sell for the normal pirce of Rs15/-.)Considering the heavy rush in the area, a tea stall was started along with a cool bar. Lottery ticket people also assembled. Seeing the possibility, Arjun started a rest house nearby and now the trade is shifted to the rest house for which Arjun will get an entrance fee, registration fee and a certain percentage of the profit.

Sooner he invited big celebrities for advertisement and financial analysts were analyzing the price variation of the milk with regard to the war in Iraq and Gold price in London. The highest price for a liter of milk is reported at Rs 15,385/-. And the richest man, who become a multi millionaire within a span of one month really started his business with a mere Rs 5000/-.

I am not exaggerate the story much…can we draw a parallel to the story in our stock exchanges???

Let us now examine the BSE Sensex, to do some justice to the topic.

* * "Emerge as the premier Indian stock exchange by establishing global benchmarks" * * * says the vision of Bombay Stock Exchange and they describe Sensex as

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    • "THE BAROMETER OF INDIAN CAPITAL MARKETS" * *
    
    
    
  
  
  

Accepting the international events in the stock trading, we have to admit that Sensex represent the Indian stock market for the world and the vision is materializing. In that regard, BSE have done a wonderful job in benchmarking with international sellers.

SENSEX is the value wighted average index of 30 market leaders which will be reviewed from time to time. Tata Steal, ONGC, Infosys, ACC, HDFC, Dr. Reddy's Laboratory etc. are examples of listed companies, which show the diversity in it s selection. (If you are a hardcore fan of stocks, read the link from the web site of Bombay stock exchange. https://bseindia.com/about/abindices/bse30.asp. You can also ref wikipedia)

In 1979, the value of the index was Rs100/- where in 1990, it was valued at Rs1,000/-. In the year 2000, the index touched the mark of Rs 6,000/ Till 2005, the growth was somewhat balanced and the growth looks realistic, however the index's increase from Rs 7,000/- in 2005 to Rs 15,000/- in 2007 is not well explained by financial analysts.

The secret of this boost was simply Rupee's value increase. The day Rupee start sliding the overseas investors will withdraw their money with immediate affect as they know once the index fall means the RBI will reduce the rupee to control the outflow of funds. Also the major increase is highly depending on the strength of the dollar. When the Dollar picks up after its Iraq debacle, surely there will be a big bang in Indian sensex which now behave just double than necessary to any international changes. In a week before Saddam Hussain's execution, $10 billion is wiped out of UAE markets and all those lost were mainly local. Beneficiaries were mainly overseas players. One who plays the game without knowing who control the game is suppose to lose.

What really make or break stock exchanges?

There are several factors starting from increased interest rate, a booming real estate sector, or opening up or fall of a country. A budget which impose tax or allow tax concession, expected political stability or instability, fluctuation in international stock exchanges etc. Performance report of a linked company or a big debacle to one of the companies can also make a huge change. Generally, alternative investment opportunities define the change in the stock market exchanges along with the performance of the listed companies and its environment.

So, what is best?

The best is to stay away from the game, if you are not ready to gamble. If at all, gambles, never ever gamble with your entire worth. We should not be like Dharmaputhra of Bharata, where he gambled even pledging his wife which prompted a huge war. In modern day Dharmaputra's of stock exchanges often resorted to suicides, where many stories are not told in public.

You have heard of a lot of people who made money out of stocks and shares. There are a lot others who lost money as well. Stock trading is like a musical chair game, when the music stop, one player will be out and if it is not you, fine.

I know there are many who cannot resist investing. Original purchase of Shares is highly recommended where you always have a better chance to get a reasonable return I may recommend it, where buying and selling of stocks in a higher price always come with a risk tag and need special skill to walk through the rope way.

Just play a game assuming you invested Rs 10,000,000/- in any shares you like. Just play with it and most likely your start yourself to invest in the shares. However, wait and continue the play everyday for some 2 years and see the mornings you get the heart attacks and the days you left with sleepless nights, with the imaginary shares…also reason the changes to start investing wisely…

Did you have any stock experience? Do you know a person who made money out of stocks and become a millionaire and stopped the trade? Did you know somebody who lost in stocks? Share your stock experience…