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Thursday, September 15, 2011

Understanding Stock markets charts for investing

There are lots of investing guides available, some of them claiming 100 percent success rate, but this all is untrue. No one can gurrantee returns in stock markets and no investment tips can claim to have 100 percent profit rates. In this post I would throw some light on another approach in choosing the best stock for investing your hard earned money into.

This approach is based on analysis of stock market charts and believe me there are negligible stock tips or stock investment tutorials present on internet which gives an insight about how to use stock market charts while investing in volatile conditions or when bearish trends are going on. You can also understand all the stock market investing tips links present on left side of my blog.

Related Posts-
Investing in volatile stock markets
NSE NIFTY charts

Stock market charts are not difficult to understand by a person who has even slight analytical power. There are lots of website which provide daily stock charts or even sell charts to investment houses for analysis over a certain period of time and they all are paid and no free stock charts analysis is available on internet.

Types of Stock Markets charts available:

Stock Index Charts: Stock index charts are charts which show intraday movements of a stock index like SENSEX or NIFTY stock index. Generally Stock index charts are made of indices which are largely followed in India ie Bombay Stock Exchange's 30 component SENSEX and National Stock Exchange's NIFTY index. see nifty charts and sensex charts. These stock markets charts shows overall market movements and also show about the health of economy of the country. A investor should analyse such charts for minimum period of 3 months and then decide on the component in which he wants to invest, but the point here is analysing index charts alone doesnot provide proper picture of that particular component.

Sectoral index charts: Each company works in a particular domain and develops expertise in that particular field, Now there are lots of different types of companies listed on stock markets, the management of stock exchanges thus divide the companies on basis of their domain which we know as sectoral indices like BSE IT index, BSE FMCG index etc. If a investor picks a particular company for investing then he should see where that sector is heading by see sectoral chart and then make necessary calculations and arrive to a decision.

Index component charts: These are stock charts for a particular listed company, and upon analysis shows how the company is functioning and how is the performance of the company with respect to parent index of which it is part. An investor should pick a company to invest into and analyse the stock chart of the company for atleast last three months and also he should compare the chart with respect to index performance. If the sompany stock price is regularly outperforming the index and it is continuesly showing profits, organic growth, then the investor should invest in such stock, Again if the investor has to make better decision then he should also analyse the corresponding sectoral chart. For example if a person wants to invest in Unilever then he should anlyse unilever stock chart for last three months, Sensex chart and FMCG sectoral chart for making a well calculated decision.
Still investing in stock markets is highly risky as lot of unforeseen factors can act spoilsport in no time so keep your fingers cross while investing but always perform required calculations as mentioned above for minimising the foreseen risks atleast.


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