Indulging in the Share Markets - A word of Caution

Its now become common that many youngsters are looking for easy and fast money at the share markets. Things are so simple that you can Trade conveniently from home through online trading at the internet.

Broking houses are able to lure the youngsters by opening Trading account and Demat account for a small fee and security deposit ( Margin ) which may be even about Rs 5000 only. And these broking houses also send tips through SMS and other methods advising the clients to take positions. But, mind you. The broking houses have no responsiblity if the trade goes wrong. The result is that many youngsters are losing money.

Example : I received a tip on 29th which read as " Sell LUPIN CMP Rs 1169 SL Rs 1205 for short term delivery target Rs 1080 -- India Infoline. "

The tip suggested that one should sell Lupin shares at Rs 1169 to buy it back at Rs 1080 thus expecting a profit of Rs 75-80 ( after brokerage and other charges) per share sold. There was also a caution that after you sell .. if Lupin shares actually went up instead of going down you must have Stop Loss purchase at Rs 1205 ( In the process you make a loss of nearly Rs 45 - 50 per share sold). What happened that day in the market was Lupin shares rose to Rs 1249. Anyone who had acted on the tip would have made a huge loss.

Then on 30th October 2009 there was another tip " Buy Grasim at Rs 2220 with Stop Loss of Rs Rs 2204 with a target of Rs 2260-2265". Grasim actually closed at Rs 1185. This tip also did not work out.

Youngsters who do not know the details and the processes of the share market are being misguided by such tips. There is no reasoning as to why the advise was given .. excepting information gathered from rumours. There arre so many self proclaimed analysts who dole out such advise and the Media .. CNBC NDTV Profit etc encourage such analysts to promote their Channels and their businesses.

Investing in the share markets or trading should not be based on such tips or analysts' views. These people have no responsiblity and conveniently they shield themeselves with a caveat that individual investors should make their decisions for which the Tipper or the analysts cannot be held responsible.

So beware ... Youngsters should first learn about the Share markets and study the particular share counters before making investments. Please do not fall prey to sharks out there

Written in Public Interest by Sankaran Sivaramakrishnan
I may be reached by email at sankaran@kbsconsultants.com

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