With global markets, and especially the Indian stock market, at their most volatile, many market watches are making all sorts of doomsday scenarios.
When the BSE Sensex was at the stratospheric 21,000 levels in January 2008, everyone and their uncle wanted to buy stocks, come what may.
Now that the Sensex has fallen to 10,500 levels, the exuberance that had visited the markets then is visibly missing.
However, in the process many a small investor lost tons of money. While the big players could ride the storm and perhaps get out with some hurt, many small investors lost their life's savings when the markets crashed.
So what should investors do now? Well, here's a basic check list for you to follow.
Dos and Don'ts of investing in stocks
· With the markets crashing, it is natural for you to be unnerved, but panicking will not help. Actually it's a once-in-a-lifetime opportunity to buy good stocks with strong fundamentals, but be very careful while doing so.
· Don't indulge in panic selling. Stay invested, it is time to buy stocks and not sell. Since very few people can predict market movement, NEVER try to time the market.
· To be on the safe side, invest in mutual funds, and don't listen to 'experts' who mushroom all of a sudden and are eager to give you formidable advice. If you are unsure about your research and is not too comfortable with your own judgement, MFs are your best bet.
However, there is a golden rule that applies to all and sundry. Regardless of what market experts tell you, it is critical to understand where you stand and where you want to be. Also, what level and amount of investment are you comfortable with. Therefore, take some time to evaluate your risk-bearing capacity.
· Now that you have decided to enter the market, maybe for the first time, do follow the following rules. It is imperative that you are aware of the traps and dangers of investing in stocks and exercise maximum caution.
What to do in the market
· Always deal with the market intermediaries registered with the Securities and Exchange Board of India (Sebi) / stock exchanges. Complete all the required formalities of opening an account properly (client registration, client agreement forms, et cetera).
· Always insist on contract notes from your broker. In case of doubt of the transactions, verify the genuineness of the same on the exchange Web site (http://www.bseindia.com / http://www.nseindia.com).
· Ask for and sign 'Know Your Client Agreement.'
· Read and properly understand the risks associated with investing in securities/derivatives before undertaking transactions.
· Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making your investment decision.
· Ask all relevant questions and clear your doubts with your broker before transacting.
Invest, based on sound reasoning after taking into account all publicly available information and on fundamentals.
· Give clear and unambiguous instructions to your broker / agent / depository participant.
· Be vigilant in your transactions. Insist on a contract note for your transaction.
· Scrutinise minutely both the transaction and the holding statements that you receive from your Depository Participant.
· Keep copies of all your investment documentation.
Handle Delivery Instruction Slips (DIS) Book issued by DPs carefully. Insist that the DIS number are pre-printed and your account number (Client ID) is pre-stamped.
· In case you are not transacting frequently make use of the freezing facilities provided for your Demat Account.
· Always settle the dues through the normal banking channels with the market intermediaries.
· Before placing an order with the market intermediaries please check about the credentials of the companies, its management, its fundamentals and recent announcements made by them and various other disclosures made under various regulations. The sources of information are the websites of exchanges and companies, databases of data vendor, business magazines, et cetera.
· Deliver the shares in case of sale or pay the money in case of purchase within the time prescribed.
· Participate and vote in general meetings either personally or through proxy.
· Be aware of your rights and responsibilities.
· In case of complaints approach the right authorities for redressal in a timely manner.
Adopt trading / investment strategies commensurate with your risk-bearing capacity as all investments carry risk, the degree of which varies according to the investment strategy adopted.
· Please carry out due diligence before registering as client with any Intermediary. Further, investors are requested to carefully read and understand the contents stated in the Risk Disclosure Document, which forms part of investor registration requirement for dealing through brokers in the stock market.
· Be cautious about stocks, which show a sudden spurt in price or trading activity, especially low price stocks.
· Please be informed that there are no guaranteed returns on investment in stock markets
What NOT to do while investing in stocks
· Don't deal with unregistered intermediaries.
· Don't fall prey to promises of unrealistic returns.
· Don't invest on the basis of hearsay and rumours; verify before investment.
· Don't forget to take note of risks involved in the investment.
· Don't be misled by rumours circulating in the market.
· Don't be influenced into buying into fundamentally unsound companies (penny stocks) based on sudden spurts in trading volumes or prices or non-authentic favourable looking articles/stories.
· Don't follow the herd or play on momentum - it could turn against you.
· Don't be misled by so called 'hot tips.'
· Don't try to time the market.
· Don't hesitate to approach the proper authorities for redressal of your doubts/grievances.
· Don't leave signed blank Delivery Instruction Slips of your demat account lying around carelessly or with anyone.
· Do not sign blank Delivery Instruction Slips and keep them with Depository Participant or broker to save time. Remember your carelessness can be very dangerous.
Source
When the BSE Sensex was at the stratospheric 21,000 levels in January 2008, everyone and their uncle wanted to buy stocks, come what may.
Now that the Sensex has fallen to 10,500 levels, the exuberance that had visited the markets then is visibly missing.
However, in the process many a small investor lost tons of money. While the big players could ride the storm and perhaps get out with some hurt, many small investors lost their life's savings when the markets crashed.
So what should investors do now? Well, here's a basic check list for you to follow.
Dos and Don'ts of investing in stocks
· With the markets crashing, it is natural for you to be unnerved, but panicking will not help. Actually it's a once-in-a-lifetime opportunity to buy good stocks with strong fundamentals, but be very careful while doing so.
· Don't indulge in panic selling. Stay invested, it is time to buy stocks and not sell. Since very few people can predict market movement, NEVER try to time the market.
· To be on the safe side, invest in mutual funds, and don't listen to 'experts' who mushroom all of a sudden and are eager to give you formidable advice. If you are unsure about your research and is not too comfortable with your own judgement, MFs are your best bet.
However, there is a golden rule that applies to all and sundry. Regardless of what market experts tell you, it is critical to understand where you stand and where you want to be. Also, what level and amount of investment are you comfortable with. Therefore, take some time to evaluate your risk-bearing capacity.
· Now that you have decided to enter the market, maybe for the first time, do follow the following rules. It is imperative that you are aware of the traps and dangers of investing in stocks and exercise maximum caution.
What to do in the market
· Always deal with the market intermediaries registered with the Securities and Exchange Board of India (Sebi) / stock exchanges. Complete all the required formalities of opening an account properly (client registration, client agreement forms, et cetera).
· Always insist on contract notes from your broker. In case of doubt of the transactions, verify the genuineness of the same on the exchange Web site (http://www.bseindia.com / http://www.nseindia.com).
· Ask for and sign 'Know Your Client Agreement.'
· Read and properly understand the risks associated with investing in securities/derivatives before undertaking transactions.
· Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making your investment decision.
· Ask all relevant questions and clear your doubts with your broker before transacting.
Invest, based on sound reasoning after taking into account all publicly available information and on fundamentals.
· Give clear and unambiguous instructions to your broker / agent / depository participant.
· Be vigilant in your transactions. Insist on a contract note for your transaction.
· Scrutinise minutely both the transaction and the holding statements that you receive from your Depository Participant.
· Keep copies of all your investment documentation.
Handle Delivery Instruction Slips (DIS) Book issued by DPs carefully. Insist that the DIS number are pre-printed and your account number (Client ID) is pre-stamped.
· In case you are not transacting frequently make use of the freezing facilities provided for your Demat Account.
· Always settle the dues through the normal banking channels with the market intermediaries.
· Before placing an order with the market intermediaries please check about the credentials of the companies, its management, its fundamentals and recent announcements made by them and various other disclosures made under various regulations. The sources of information are the websites of exchanges and companies, databases of data vendor, business magazines, et cetera.
· Deliver the shares in case of sale or pay the money in case of purchase within the time prescribed.
· Participate and vote in general meetings either personally or through proxy.
· Be aware of your rights and responsibilities.
· In case of complaints approach the right authorities for redressal in a timely manner.
Adopt trading / investment strategies commensurate with your risk-bearing capacity as all investments carry risk, the degree of which varies according to the investment strategy adopted.
· Please carry out due diligence before registering as client with any Intermediary. Further, investors are requested to carefully read and understand the contents stated in the Risk Disclosure Document, which forms part of investor registration requirement for dealing through brokers in the stock market.
· Be cautious about stocks, which show a sudden spurt in price or trading activity, especially low price stocks.
· Please be informed that there are no guaranteed returns on investment in stock markets
What NOT to do while investing in stocks
· Don't deal with unregistered intermediaries.
· Don't fall prey to promises of unrealistic returns.
· Don't invest on the basis of hearsay and rumours; verify before investment.
· Don't forget to take note of risks involved in the investment.
· Don't be misled by rumours circulating in the market.
· Don't be influenced into buying into fundamentally unsound companies (penny stocks) based on sudden spurts in trading volumes or prices or non-authentic favourable looking articles/stories.
· Don't follow the herd or play on momentum - it could turn against you.
· Don't be misled by so called 'hot tips.'
· Don't try to time the market.
· Don't hesitate to approach the proper authorities for redressal of your doubts/grievances.
· Don't leave signed blank Delivery Instruction Slips of your demat account lying around carelessly or with anyone.
· Do not sign blank Delivery Instruction Slips and keep them with Depository Participant or broker to save time. Remember your carelessness can be very dangerous.
Source
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