Markets Recovering

The talk of a financial Armageddon which took hold earlier this year seems to have vanished. The attention now is focussed on the extent and timing of the recovery in developed markets. Germany and France are back on terra firma with positive GDP growth in the latest quarter. The good news in the US is that the economy shrank just 1 percent in the quarter ended June 2009 as compared to a 6.4 percent drop in the previous quarter.
Stock markets around the world have been quick to recognise what appears to be a momentous inflection point. Not only have the markets climbed a “wall of worry”, the mood of investors across the globe is definitely more optimistic.

More often than not, equity markets are propelled by “animal spirits”, herd behaviour and constantly changing perceptions of “relative value”. Fundamentals do matter, but the power of capital flows is far more dramatic in the short term. So what are the implications for committing capital given the current mindset?
It is quite possible that the improving sentiment has a beneficial impact on the real economy in terms of a greater propensity for capital spending by India Inc. and higher levels of consumer spending. Keep in mind that the current government is eager to protect the financial well-being of rural India.

Evaluate Stocks

Warren Buffet is considered to be a genius when it comes to stock investment. He recommends an important thing to investors that the stock (company) you are thinking to buy or invest should have been around for at least ten years. There are a number of factors to be considered befere investing in stocks.

Techniques to Evaluate Stocks are as following
• Company History
• Dividend
• Market Cap
• Cash Flow
• Price Earnings Ratio (P/E)
• Return on Assets & Return on Equity (ROA & ROE)
• Financial Leverage
* EBIDTA

Support and Resistance of Market

Like everything else in life, stock prices are driven by supply and demand. Supply is synonymous with bears and selling. Demand is synonymous with bulls and buying.
As demand increases, prices advance and when supply increases, prices decline. When supply and demand are equal, bulls and bears slug it out for control.
Where is support established?
As the price declines, buyers become more inclined to buy and sellers less inclined to sell. A point where demand overcomes supply and prevents the price from falling becomes a support.
Human behaviour is responsible for the existence of supports and resistance.
Many investors who have zeroed in on a particular stock may not commit their resources as prices are falling. Once the price starts rising, they rue the fact that they did not buy it when it was low and vow to buy it if prices come back to those levels.
If buying demand overcomes supply at those levels, prices will rise from that level again, reinforcing the psychology. The significance of the support level increases the more times the price bounces back from that level.
Support does not always hold and a break below support signals that the supply from bears has won over the demand form bulls. A decline below support indicates a new willingness to sell and a lack of willingness to buy.
Once support is broken, another support level will have to be established at a lower level. Sometimes price movements can be volatile and an intra-day dip below support is not considered a breach of support, which we call a 'whipsaw.'
What is resistance?
As the price advances, sellers become more inclined to sell and buyers are wary of committing resources at high levels. At a point where supply exceeds demand and prices stop rising, further movement is resisted.
Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.
As the price falls from such a resistance point, investors who were hoping for a further rise now realise they have missed on selling the stock. And when prices rise to this resistance level, they remember to sell this time, which creates pressure from all such investors who were left holding the baby earlier.
This makes the resistance point a tough nut to crack.
The significance of the resistance level increases with the number of times the price reverses from that level.
Just like support, resistance does not always hold and a break above resistance signals that the bulls have won out over the bears. A break above resistance shows a new willingness to buy and/or a lack of incentive to sell.

My Investment Chart

This is investment chart I have taken for my money in market through reliance money

Master The Stock Market

Here are three simple tips to get you through a turbulent market
1. Don't sway from your goals
If you are going to need money in the next year or two, then do not channelise your savings to the stock market. Because though no one knows the direction of the market, chances are that it may not pick up in this time frame, certainly not in 2009.
Think like a long-term investor, not like a stock trader. Equity is an investment for the long-term investor. Opt for it only if you do not need the money for at least 3 to 5 years.
2. Stick to your asset allocation
You must first decide how much of your money must go into equity or debt. This should be based on your age, goals, liabilities, dependents and income. Once you have made up your mind, do not assume that it's alright to alter your basic asset allocation with sole reference to the market situation and with no regard to a change in your personal situation.
So if you had decided on keeping 60 per cent of your assets in equity, stick with it. Don't just rush into fixed deposits because interest rates seem seductive. On the other hand, just because the prices of stocks have hit tempting lows, don't get over enthusiastic and pull out all your current investments in debt and deploy it in equity funds or stocks. Play the ULIP allocation safetly.
3. Don't attempt to time the market
Don't keep waiting for stocks to get whiplashed one more time to buy. On the other hand, once you invest, don't expect the market to oblige you and bounce back immediately. No one knows for sure if the market has bottomed out or worse is still to come. But it's probably safe to say that we are far near the bottom than the top.
If you are investing in an equity mutual fund, go for a (SIP). In this way, you benefit if the market is going to tank some more. Even if it does not, chances of a rally happening in the immediate future are dim and you are buying units at a low cost right now.
In conclusion, it would be wise to say -- Don't let the news stress you out. So if the market crashes one day and has extreme volatility the next, don't let that get to it. The short-term direction of the stock market can always be adverse. If you are in for the long term, you have nothing to fear.