Project Work Report on

THE STUDY ON STOCK MARKET

WHY ALMOST PEOPLES FAILS IN THE
STOCK MARKET
By

Janak Raj Upadhyay

19MEBMB604
Submitted to

BIKANER TECHNICAL UNIVERSITY

In partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

INTERNAL GUIDE

Dr. Navin Sharma, Management

Department of MBA Engineering College of Bikaner

2019-2021

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 CERTIFICATE

This is to certify that Janak Raj Upadhyay bearing Roll No 19MEBMB604, is a bonafide student of

Master of Business Administration course of the Institute (2019-2021), affiliated to Bikaner

Technical University, Bikaner, Rajasthan.

Project Work report on “THE STUDY ON STOCK MARKET, WHY ALMOST

PEOPLES FAILS IN THE STOCK MARKET” is prepared by her under the guidance of
Dr. Richa Yadav, in partial fulfilment of the requirements for the award of the degree of Master of
Business Administration of Bikaner Technical University, Bikaner, Rajasthan.

Signature of Internal Guide Signature of HOD

Place:

Date:

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 DECLARATION

I hereby declare that this project work entitled. “THE STUDY ON STOCK MARKET,
WHY ALMOST PEOPLES FAILS IN THE STOCK MARKET has been prepared by
me during the year 2021 under the guidance of Dr Navin Sharma, Department of
Management and Technology, Government Engineering College (Bikaner).

I also declare that this project is the outcome of my own effort, that it has not been submitted
to any other university for the award of any degree.

Signature of the Student

Janak Raj Upadhyay
19MEBMB601

Date :

Counter Signature by Mentor

Date :

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 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my mentor Dr. Navin Sharma who
gave me the golden opportunity to do this wonderful project on the topic “Study on the
Stock Market, Why Almost Peoples Fails in Stock Market”, which also helped me in
doing a lot of Research and i came to know about so many new things I am really thankful to
them.
Secondly i would also like to thank my parents and friend Sourabh Verma who helped me a
lot in finalizing this project within the limited time frame.

Date : Place:

Bikaner

Janak Raj Upadhyay

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 TABLE OF CONTENT

S.No Contents Page No.

1 Introduction :- Stock Market 1-3

2 How does stock market works 4-8

3 Mistakes of Retail Investors 9-12

4 Cheating By The Brokers 13-14

5 15
Investor-Cheated by Insider Trading

6 Insider Cases in stock market 16-17

7 Survey 18-23

8 Lessons for investors 24-26

9 Lessons by the book: Trading in the zone 27-30

10 Tips by the Warren Buffet 31-32

11 References 33-33

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 INTRODUCTION:- STOCK MARKET

Stock market is a place where people buy/sell shares of publicly listed companies. It offers a
platform to facilitate seamless exchange of shares. In simple terms, if A wants to sell shares
of Reliance Industries, the stock market will help him to meet the seller who is willing to buy
Reliance Industries. However, it is important to note that a person can trade in the stock
market only through a registered intermediary known as a stock broker. The buying and
selling of shares take place through electronic medium. We will discuss more about the stock
brokers at a later point.

Major Stock Exchanges in India

There are two main stock exchanges in India where majority of the trades take place -
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Apart from these
two exchanges, there are some other regional stock exchanges like Bangalore Stock
Exchange, Madras Stock Exchange etc but these exchanges do not play a meaningful role
anymore.
National Stock Exchange (NSE)
NSE is the leading stock exchange in India where one can buy/sell shares of publicly listed
companies. It was established in the year 1992 and is located in Mumbai. NSE has a flagship
index named as NIFTY50. The index comprises of the top 50 companies based on its trading
volume and market capitalisation.  This index is widely used by investors in India as well as
globally as the barometer of the Indian capital markets.
Bombay Stock Exchange (BSE)
BSE is Asia’s first as well as the oldest stock exchange in India. It was established in 1875
and is located in Mumbai. It has a total of ~5,295 companies listed out of which ~3,972 are
available for trading as on August 21, 2017. BSE Sensex is the flagship index of BSE. It
measures the performance of the 30 largest, most liquid and financially stable companies
across key sectors.
Different Market Participants
There are a lot of individuals and corporate houses who trade in a stock market. Anyone who
buys/sells shares in a stock market is termed as a market participant. Some of the categories
of market participants are as follows:
 Domestic Retail Participants-These are individuals who transact in the markets.
 NRI’s and Overseas Citizen of India (OCI)-These are people of Indian origin who reside
outside India.
 Domestic Institutions-These are large corporate entities based in India (for example: LIC of
India).
 Domestic Asset Management Companies (AMC)-The market participants in this category
would be mutual fund companies like HDFC AMC, SBI Mutual Fund, DSP Black Rock and
many more similar entities.
 Foreign Institutional Investors-FIIs are Non-Indian corporate entities such as foreign asset
management companies, hedge funds and other investors.

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 Regulator of the Indian Stock Market

Securities Exchange Board of India

Securities Exchange Board of India (SEBI) is the regulatory body of the Indian Stock
Markets. The main objective of SEBI is to safeguard the interest of retail investors, promote
the development of stock exchanges, and regulate the activities of financial intermediaries
and investors in the market. SEBI ensures the following:
 The stock exchanges (BSE and NSE), brokers and sub-brokers conduct their business fairly.
 Corporate houses should not use markets as a mean to unfairly benefit themselves
 Small retail investors’ interest is protected.
 Large investors with huge cash should not manipulate markets.

Types of Financial Intermediaries in the Stock Market

From the time an investor places his order to buy shares till the time it is transferred to his
Demat account, a number of corporate entities are involved to ensure smooth transaction.
These entities are known as financial intermediaries and they work according to the rules and
regulations prescribed by SEBI. Some of the financial intermediaries are discussed below:
Stock Broker
A stock broker also known as a dealer is a professional individual who buys/sells shares on
behalf of its clients. A stock broker is registered as a trading member with the stock exchange
and holds a stock broking license. They operate under the guidelines prescribed by SEBI. An
individual needs to open trading/DEMAT account to transact in the financial market.

Depository and Depository Participants

A Depository is a financial intermediary that offers the service of DEMAT account. A
DEMAT account will have all the shares that an investor owns in electronic format. In India,
there are only two depositaries which offers DEMAT account services - National Securities
Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). An
investor cannot directly go to the depositary to open the DEMAT account. He needs to
appoint a Depository Participant (DP). According to SEBI guidelines, banks, financial
institutions and members of stock exchanges registered with SEBI can become DPs.

Banks
Banks help to transfer funds from a bank account to a trading account. The client needs to
categorically mention which bank account has to be linked to the trading account to the stock
broker at the time of opening the trading account.

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 National Security Clearing Corporation Ltd (NSCCL) and Indian Clearing
Corporation Ltd (ICCL)

NSCCL and ICCL are 100% subsidiaries of National Stock Exchange and Bombay Stock
Exchange respectively. They ensure guaranteed settlement of transactions carried in stock
exchanges. The clearing corporation ensures there are no defaults either from buyers or
sellers side.
DEMAT Account and Trading Account
In order to trade in equities, it is mandatory to have a DEMAT account as well as the Trading
account.
DEMAT Account
DEMAT account or dematerialized account allows holding shares in electronic form instead
of taking physical possession of certificates. It is mandatory to have a DEMAT account to
trade in shares.  DEMAT account holds all the investments an individual makes in shares,
exchange traded funds, bonds, government securities, and mutual funds in one place.
How to open DEMAT Account?
Below mentioned are the steps to open DEMAT account in India:
 To open a DEMAT account; an individual has to approach a depository participant (DP), an
agent of depository, and fill up an account opening form. The list of DPs is available on the
website of depository’s i.e. CDSL and NSDL.
 An individual must attach photocopies of KYC documents like identity proof, proof of
address along with the account opening form.
 The DP will provide the depository participant ID or client ID. All the purchase / sale of
shares will be through DEMAT Account
Trading Account
A trading account is used to place buy/sell orders in the stock market. One can open their
trading account with a stock broker who is registered with SEBI. An order can be placed
either through an online or offline mode. In the online mode, one can buy/sell stocks through
the trading terminal provided by the broker whereas; in the offline mode, an individual can
ask its broker to place an order on his/her behalf.
Key takeaways
 A stock market is a place where people buy/sell shares or stocks of publicly listed companies.
 NSE and BSE are the two major stock exchanges in India.
 An individual has to mandatorily open a trading account to trade in the stock market.
 There are different market participants like retail investors, domestic institutions and foreign
institutional investors
 Indian stock market is governed by SEBI.
 There are different financial intermediaries like stock broker, banks, depository participants
etc.

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 DEMAT account or dematerialized account allows holding shares in electronic form instead
of taking physical possession of certificates.

How Does the Stock Market Work?

We all know how important it is to invest money in the right avenues to grow wealth. Stock
market investment is one such lucrative option that has rewarded investors with high returns
over the years. However, to gain the maximum out of a financial instrument, it is essential to
know about its workings. Let’s get back to the basics and learn how the stock market works
in India.

Participants of Stock Market - The stock market is an avenue where investors trade in
shares, bonds, and derivatives. This trading is facilitated by stock exchanges, which can be
thought of as markets that connect buyers and sellers. Four participants are involved in the
stock market.

1. Securities and Exchange Board of India (SEBI): SEBI is the regulator of stock markets

in India and ensures that securities markets in India work in order. SEBI lays down regulatory
frameworks where exchanges, companies, brokerages, and other participants have to abide by
to protect investors’ interests.

2. Stock exchanges: The stock market is an avenue where investors trade in shares, bonds,
and derivatives. This trading is facilitated by stock exchanges. In India, there are two primary
stock exchanges on which companies are listed.

 Bombay Stock Exchange (BSE) – Sensex is its index

 National Stock Exchange (NSE) – Nifty is its Index

3. Stockbrokers/brokerages: A broker is an intermediary ( person or a firm) that executes

buy and sell orders for investors in return for a fee or a commission.

4. Investors and traders: Stocks are units of a company’s market value. Investors are
individuals who purchase stocks to become part owners of the company. Trading involves
buying or selling this equity. To understand how to share market works, the next thing is to
learn about primary and secondary markets

1. Primary Markets 
The primary stock market provides an opportunity to issuers of stocks, especially corporates,
to raise resources to meet their investment requirements and discharge some obligations and
liabilities.
A company lists its shares in the primary market through an Initial Public Offering or IPO.
Through an IPO, a company sells its shares for the first time to the public. An IPO opens for
a particular period. Within this window, investors can bid for the shares and buy them at the
issue price announced by the company.

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Once the subscription period is over, the shares are allotted to the bidders. The companies are
then called public because they have given out their shares to the common public.

For this, companies need to pay a fee to the stock exchanges. They are also required to
provide all important details of the company’s financial information such as quarterly/annual
reports, balance sheets, income statements, along with information on new projects or future
objectives, etc. to the stock markets.

2. Secondary Market
The last step involves listing the company on the stock market, which means that the stock
issued during the IPO can now freely be bought and sold. The secondary stock market is
where shares of a company are traded after being initially offered to the public in the primary
market. It is a market where buyers and sellers meet directly.

Trading in the Stock Market

Once listed on the stock exchanges, the stocks issued by companies can be traded in the
secondary market to make profits or cut losses. This buying and selling of stocks listed on the
exchanges are done by stockbrokers /brokerage firms, that act as the middleman between
investors and the stock exchange.

Your broker passes on your buy order for shares to the stock exchange. The stock exchange
searches for a sell order for the same share.

Once a seller and a buyer are found and fixed, a price is agreed to finalize the transaction.
Post that the stock exchange communicates to your broker that your order has been
confirmed.

This message is then passed on to you by the broker.

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Meanwhile, the stock exchange also confirms the details of the buyers and the sellers of
shares to ensure the parties don’t default.

It then facilitates the actual transfer of ownership of shares from sellers to buyers. This
process is called the settlement cycle.

Earlier, it used to take weeks to settle stock trades. But now, this has been brought down to
T+2 days.

For example,

If you trade a stock today, you will get your shares deposited in your Demat/trading account
by the day after tomorrow (i.e. within two working days).

The stock exchange also ensures that the trade of stocks is honored during the settlement.

If the settlement cycle doesn’t happen in T+2 days, the sanctity of the stock market is lost,
because it means trades may not be upheld.

Stockbrokers identify their clients by a unique code assigned to an investor.

After the transaction is done by an investor, the stockbroker issues him/her a contract note
which provides details of the transaction such as time and date of the stock trade.

Apart from the purchase price of a stock, an investor is also supposed to pay brokerage fees,
stamp duty, and securities transaction tax.

In case of a sale transaction, these costs are reduced from the sale proceeds, and then the
remaining amount is paid to the investor.

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 At the broker and stock exchange levels, there are multiple entities/parties involved in the
communication chain like brokerage order department, exchange floor traders, etc.

But the stock trading process has become electronic today. So, the process of matching
buyers and sellers is done online and as a result, trading happens within minutes.

Pricing of Shares in the Stock Market

The key to making money in the stock market is to learn how to properly value a company
and its share price in the context of the Indian economy and the firm’s operating sector.

Let me explain to you how stocks are priced through a simple example.

Let’s say you bought a notebook for ₹100. The next day, a friend of yours offered you to sell
it for ₹150 to him.

So, what’s the price of the notebook then?

It is from ₹150. You can encash ₹150 by selling the notebook to him.

But you choose to reject his offer hoping that your other friends may bid more than ₹150.

The very next day 3 of your friends offer you ₹200, ₹250 and ₹300 for the notebook
respectively.

Now, what’s the price of the notebook?

It’s ₹300 as this is the highest bid for your notebook. You now know that your possession is
valuable and decide to reject the current offers, hoping for a higher bid tomorrow. However,
the next day, a fellow student brings a better quality notebook to school with shinier pages.

Your friends are now attracted to this notebook more than yours and this leads to a dip in the
value of your notebook. Now only a handful of people are willing to pay for your notebook
and that too at the last quoted price i.e ₹300.

This is exactly how demand and supply affect the price of a share in the stock market.

When the students were optimistic and ready to pay higher cash than its current price, the
price appreciated. When a lesser number of students wanted your notebook, the price fell
down.

Just keep this small concept in your mind:

 When the demand for shares is more than supply, the price rises.

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 When the demand for shares is less than supply, the price falls.
The Indian stock exchanges, BSE and NSE, have algorithms that determine the price of
stocks on the basis of volume traded and these prices change pretty fast. So this is how the
stock market works in India. There is definitely more to it however this is a good starting
point to develop further understanding.

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 Mistakes of Retail Investors
1. Buying high and selling low The fundamental principle of investing is to buy low
and sell high, so why do so many investors do the opposite? Instead of rational
decision making, many investment decisions are motivated by fear or greed. In many
cases, investors buy high in an attempt to maximize short-term returns instead of
trying to achieve long-term investment goals. A focus on near-term returns leads to
investing in the latest investment craze or fad or investing in the assets or investment
strategies that were effective in the near past. Either way, once an investment has
become popular and gained the public’s attention, it becomes more difficult to have
an edge in determining its value.

2. 2 Trading too much and too often When investing, patience is a virtue. Often it
takes time to gain the ultimate benefits of an investment and asset allocation strategy.
Continued modification of investment tactics and portfolio composition can not only
reduce returns through greater transaction fees, it can also result in taking
unanticipated and uncompensated risks. You should always be sure you are on track.
Use the impulse to reconfigure your investment portfolio as a prompt to learn more
about the assets you hold instead of as a push to trade.

3. Paying too much in fees and commissions Investing in a high-cost fund or paying
too much in advisory fees is a common mistake because even a small increase in fees
can have a significant effect on wealth over the long term. Before opening an account,
be aware of the potential cost of every investment decision. Look for funds that have
fees that make sense and make sure you are receiving value for the advisory fees you
are paying.

4. 4 Focusing too much on taxes Although making investment decisions on the basis of
potential tax consequences is a bit like the tail wagging the dog, it is still a common
investor mistake. You should be smart about taxes—tax loss harvesting can improve
your returns significantly—but it is important that the impetus to buy or sell a security
is driven by its merits, not its tax consequences.

5. Expecting too much or using someone else’s expectations Investing for the long
term involves creating a well-diversified portfolio designed to provide you with the
appropriate levels of risk and return under a variety of market scenarios. But even
after designing the right portfolio, no one can predict or control what returns the
market will actually provide. It is important not to expect too much and to be careful
when figuring out what to expect. Nobody can tell you what a reasonable rate of
return is without having an understanding of you, your goals, and your current asset
allocation.

6. Not having clear investment goals The adage, “If you don’t know where you are
going, you will probably end up somewhere else,” is as true of investing as anything
else. Everything from the investment plan to the strategies used, the portfolio design,

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 and even the individual securities can be configured with your life objectives in mind.
Too many investors focus on the latest investment fad or on maximizing short-term
investment return instead of designing an investment portfolio that has a high
probability of achieving their long-term investment objectives.

7. 7 Failing to diversify enough The only way to create a portfolio that has the potential
to provide appropriate levels of risk and return in various market scenarios is adequate
diversification. Often investors think they can maximize returns by taking a large
investment exposure in one security or sector. But when the market moves against
such a concentrated position, it can be disastrous. Too much diversification and too
many exposures can also affect performance. The best course of action is to find a
balance. Seek the advice of a professional adviser.

8. Focusing on the wrong kind of performance There are two timeframes that are
important to keep in mind: the short term and everything else. If you are a long-term
investor, speculating on performance in the short term can be a recipe for disaster
because it can make you second guess your strategy and motivate short-term portfolio
modifications. But looking past nearterm chatter to the factors that drive long-term
performance is a worthy undertaking. If you find yourself looking short term, refocus.

9. Not reviewing investments regularly If you are invested in a diversified portfolio,

there is an excellent chance that some things will go up while others go down. At the
end of a quarter or a year, the portfolio you built with careful planning will start to
look quite different. Don’t get too far off track! Check in regularly (at a minimum
once a year) to make sure that your investments still make sense for your situation and
(importantly) that your portfolio doesn’t need rebalancing.

10. Taking too much, too little, or the wrong risk Investing involves taking some level
of risk in exchange for potential reward. Taking too much risk can lead to large
variations in investment performance that may be outside your comfort zone. Taking
too little risk can result in returns too low to achieve your financial goals. Make sure
that you know your financial and emotional ability to take risks and recognize the
investment risks you are taking.

11. Not knowing the true performance of your investments It is shocking how many
people have no idea how their investments have performed. Even if they know the
headline result or how a couple of their stocks have done, they rarely know how they
have performed in the context of their portfolio. Even that is not enough; you have to
relate the performance of your overall portfolio to your plan to see if you are on track
after accounting for costs and inflation. Don’t neglect this! How else will you know
how you are doing?

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12. Reacting to the media There are plenty of 24-hour news channels that make money
by showing “tradable” information. It would be foolish to try to keep up. The key is to
parse valuable information out of all the noise. Successful and seasoned investors
gather information from several independent sources and conduct their own
proprietary research and analysis. Using the news as a sole source of investment
analysis is a common investor mistake because by the time the information has
become public, it has already been factored into market pricing.

13. Trying to be a market timing genius Market timing is possible, but very, very, very
hard. For people who are not well trained, trying to make a well-timed call can be
their undoing. An investor that was out of the market during the top 10 trading days
for the S&P 500 Index from 1993 to 2013 would have achieved a 5.4% annualized
return instead of 9.2% by staying invested. This difference suggests that investors are
better off contributing consistently to their investment portfolio rather than trying to
trade in and out in an attempt to time the market.

14. Not doing due diligence There are many databases in which you can check whether
the people managing your money have the training, experience, and ethical standing
to merit your trust. Why wouldn’t you check them? Ask for references and check their
work on the investments that they recommend. The worst case is that you trade an
afternoon of effort for sleeping better at night. The best case is that you avoid the next
“Madoff” scheme. Any investor should be willing to take that trade.

15. Working with the wrong adviser An investment adviser should be your partner in
achieving your investment goals. The ideal financial professional and financial
service provider not only has the ability to solve your problems but shares a similar
philosophy about investing and even life in general. The benefits of taking extra time
to find the right adviser far outweigh the comfort of making a quick decision.

16. Letting emotions get in the way Investing brings up significant emotional issues that
can impede decision making. Do you want to involve your spouse in planning your
finances? What do you want to happen with your assets after you die? Don’t let the
immensity of these questions get in the way. A good adviser will be able to help you
construct a plan that works no matter what the answers to these questions are.

17. Forgetting about inflation Most investors focus on nominal returns instead of real
returns. This focus means looking at and comparing performance after fees and
inflation. Even if the economy is not in a massive inflationary period, some costs will
still rise! It is important to remember that what you can buy with the assets you have
is in many ways more important than their value in dollar terms. Develop a discipline
of focusing on what is really important: your returns after adjusting for rising costs.

18. Neglecting to start or continue Individuals often fail to begin an investment program
simply because they lack basic knowledge of where or how to start. Likewise, periods
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 of inactivity are frequently the result of lethargy or discouragement over previous
investment losses. Investment management is a discipline that is not overly complex,
but requires continual effort and analysis in order to be successful.

19. Not controlling what you can People like to say that they can’t tell the future, but
they neglect to mention that you can take action to shape it. You can’t control what
the market will bear, but you can save more money! Continually investing capital
over time can have as much influence on wealth accumulation as the return on
investment. It is the surest way to increase the probability of reaching your financial
goals.

Cheat By Brokers

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 1. Hidden Charges :- Sometimes broker charges for unknown facts, they misleads the
customer by deducting money.

2. Bad Server When Trade is on the Way :- Sometimes they make fool to their
customers, they make excuses that the server is bad right now, in this condition
customer takes loss. This is bad manner they should give compensations for damages
to their customers.

3. At 18 broker defaults on the National Stock Exchange (NSE) and 16 on the Bombay
Stock Exchange (BSE), the year 2020 has seen the highest number of broker defaults
in the past 20 years. In fact, since the dotcom bubble burst and the Ketan Parekh scam
of 2001-2002, this is the highest number of broker defaults this century, raising
serious questions about the quality of supervision of the capital market and stock
exchanges. 

Almost all these defaults have inflicted crippling losses on investors. In many cases, brokers

used investors’ shares to obtain leverage and take speculative positions on the derivatives

market leading to losses. Sometimes, they passed back a small interest for the pledged shares

but, in many cases, investors were unaware of their shares being pledged.  

In the period since November 2019, the near monopolistic NSE has declared 18 brokers as

defaulters and expelled them. This impacts the BSE as well and it invariably has to follow

suit and has declared 16 brokers as defaulters and expelled them. Karvy Stock Broking, the

biggest brokerage firm to be expelled, along with Anugrah Stock Broking are the latest

additions to the defaulter list last month. This list does not include the two firms which

abruptly closed down their capital market business of their own accord (voluntarily). One is

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India Nivesh, whose voluntary closure has led to litigation between HDFC Bank and

Edelweiss Custodial Services and exposed the shady practice of 'funded fixed deposits' being

accepted by the clearing corporation as collateral. In this case, the dispute is over a Rs100

crore funded FD, which HDFC Bank refused to honour.

Investor- Cheated By the Insider Trading

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 What Is Insider Trading?
Insider trading involves trading in a public company's stock by someone who has non-public,
material information about that stock for any reason. Insider trading can be either illegal or
legal depending on when the insider makes the trade. It is illegal when the material
information is still non-public, and this sort of insider trading comes with harsh
consequences.

KEY TAKEAWAYS

 Insider trading is the buying or selling of a publicly traded company's stock by

someone who has non-public, material information about that stock
 Material nonpublic information is any information that could substantially impact an
investor's decision to buy or sell the security that has not been made available to the
public.
 This form of insider trading is illegal and comes with stern penalties including both
potential fines and jail time.
 Insider trading can be legal as long as it conforms to the rules set forth by the SEC.
 

Examples of insider trading cases that have been brought by the SEC are cases against:

 Corporate officers, directors, and employees who traded the corporation's securities after
learning of significant, confidential corporate developments;
 Friends, business associates, family members, and other "tippees" of such officers, directors,
and employees, who traded the securities after receiving such information;
 Employees of law, banking, brokerage and printing firms who traded based on information
they obtained in connection with providing services to the corporation whose securities they
traded;
 Government employees who traded based on confidential information they learned because
of their employment with the government;
 Political intelligence consultants who may tip or trade based on material, nonpublic
information they obtain from government employees; and
 Other persons who misappropriated, and took advantage of, confidential information from
their employers, family, friends, and others.

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 Insider Cases in Stock Market

Rakesh Jhunjhunwala

Rakesh Jhunjhunwala was probed by the SEBI in January 2020 on account of alleged insider
trading. These allegations were based on the trades made by him and his family in the IT
education firm Aptech. Aptech is the only firm in Jhunjhunwala’s portfolio in which he owns
16
managerial control. SEBI also questioned Jhunjhunwalas wife, brother, and mother in law.
This, however, is not the first time that Rakesh Jhunjhunwala has been embroiled in insider
trading controversy.

In 2018 too he was questioned over suspicion of insider trading in the shares of the
Geometric. Rakesh Jhunjhunwala settled the case through a Consent order mechanism. In a
consent order, SEBI and the accused negotiate a settlement in order to avoid a long drawn
litigation process. Here an alleged violation can be settled by the accused by paying SEBI a
fee without the admission or denial of guilt.

Ex-Goldman Director Rajat Gupta’s Insider Case :- Gupta was convicted of illegally

sharing information about Goldman Sachs to hedge fund manager Raj Rajaratnam, who is
serving 11 years in prison for insider trading. The case involving Gupta revolved around
the day in 2008 when Warren Buffett agreed to invest in Goldman Sachs.

How does insider trading affect investors?

Insider traders and other speculators with private information are able to appropriate some
part of the returns to corporate investments made at the expense of other shareholders. As a
result, insider trading tends to discourage corporate investment and reduce the efficiency of
corporate behavior.
There is a bull trap and a bear trap !!! In rising Mkt some shares start daily up move and
anybody can buy today and sell tomorrow morning in profit as there is always Gap up
opening…. slowly this news spreads and many s retail investors start buying and one fine
morning this share crashes and again people think this is a good buying opportunity to
average and buy again only to compound the losses !!! This is called aBull trap !!! Similarly
in falling mkt some shares fall daily and people start short selling in order to make profit by
buying it later at lower levels and one fine morning this shares starts rising daily and bears
are trapped and are forced to buy it at higher rate in loss !! This is called Bear Trap !!!

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 Survey
7/15/2021 Stock Market

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19
 In this survey there are 20 participants and the highest majority is taken by the 18-24
yrs age group they are 80% and less are 25-34 yrs age group.

 There are 16 males and 4 females in this survey.

 In this survey 78.6% participants believe that the stock market is mostly an
opportunity and rest 21.4% thinks it is mostly a risk.

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 Almost peoples don’t know that ho to pick stocks for investing, 22.7% knows about
picking stock, 4.5% pick stocks by reading stock’s growth.

 According to our survey 60% of peoples are not aware about the technical analysis.
 5% which means only one person is using volume indicator.
 Three other participants are following some estimates of fundamental analysis they
are not sure with technical analysis.

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 This chart is showing number of interest in fundamental analysis, there is only 5
person know about fundamental analysis, rest 15 paticipants are not know about
fundamental analysis.

 According to this chart only six participants own stocks at present time, rest
participants don’t have stocks.

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 We found that almost participants are don’t know about stop-loss system.
 Some participants are believe that the stock market is risky.
 Interested peoples are in high numbers, they wants to learn about stock market.

Stock Market Survey

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 Lesson For Investors

7 Investment Lessons to learn 

For the best of traders and investors, year 2020 must have been as confounding as it was
nerve-racking. Had you bought the Sensex in January and held on to it, you would have
earned 14.5%, excluding dividends. That is an extremely good return in any given year. Of
course, had you bought at the bottom of March 2020, you would have earned 83%, but that
is a big “if”. Here are 7 important investment lessons that year 2020 taught us. These are
nothing new, but the chaos of 2020 reinforced these valuable lessons.

In investing, let the head rule over the heart

That is easier said than done. How many investors can keep their sanity and balance
when the markets fall vertically by almost 40% in less than 2 months? If you go by
your heart, it is easy to act in haste and make wrong decisions. That is where; your
head must come in and apply cold logic. Is this the end of the Indian economy?
Obviously not. Are the top 20 Indian companies going to vanish overnight? Obviously
not. Should you buy good stocks at lower prices? That is a logical way to look at it.

Diversification is still the best strategy

You got 14.5% on the Sensex in 2020 with a lot of tumult and heartburn. But gold gave
you 30% for the last 2 years in succession with a very passive approach. Even
government bond funds have yielded 10-11% due to a sharp fall in yields. The moral of
the story is that there is place for all these assets in your portfolio. Diversification is
not a choice; it is mandatory.

Perfect timing is an impractical idea

Had you bought the Sensex on 23rd March, you would be sitting on 83% returns by
December. But the fact is you did not buy on 23 March; either because you did not
have the money or the stomach to buy. Buying at the bottom and selling at the top is
not a bad idea; it is just an impractical idea.

One way to address this challenge is through the SIP approach. Would SIPs have

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worked? Take the best performing large cap fund of last year, Canara Robeco Blue
Chip. On a YOY basis, the fund delivered 22% returns. Instead had you done a
monthly SIP, the IRR on the SIP would have been 54%. The moral of the story is not
to fret about timing; SIPs still work.

Doing nothing is also a strategy

If you thought that you must decide between buying and selling stocks at any point of
time, you are mistaken. Had you just stayed invested in the volatile market, you would
have still ended up with solid returns. The problem arises, when you try to play the
volatility and then double your bets to recover losses. In a volatile and unpredictable
market, doing nothing can be a useful strategy.

Be greedy when others are fearful

Warren Buffett has always maintained that you must look at stocks exactly the same
way as you look at a bargain sale. The year 2020 showed that if you wait patiently and
buy stocks when everyone else is paranoid, you will get hold of very good stocks at
atrociously low prices. HDFC Bank was available at a P/E of 16-17 this year. These
are opportunities you surely don’t want to let go.

Good things can get better and bad things can get worse
This is something every investor would have faced this year. When markets fell
sharply in January, aggressive investors doubled their bets. But prices kept falling
vertically. On the other hand, when the recovery started in April, most investors rushed
to take profits at the first opportunity. In both cases, you would have been awfully
disappointed.

The golden rule to remember is that when there is a major disruption followed by a
sharp recovery; you must never be in a hurry to enter or to exit. Wait for the volatility
to subside and then look for the best ideas.

Put your trust, because pessimists never prosper

You would have seen bulls and bears make money or traders and investors make
money. But it is really hard to find a pessimist who makes money. That is because any

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investment decision requires you to connect the dots and that requires that you trust
something.

You either got to trust your skills, or your gut or you got to trust the intrinsic value of
the company or the business model that you are investing in. Any investment decision
needs trust. During 2020, most pessimists would have told you in March that markets
were finished and in August they would have told you that markets are overheated.
Year 2020 taught us, above all else, that to be a good investor we need to put our trust.
Being pessimistic really does not get us too far in investing.

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 Lessons By The Book : Trading in The Zone

In this interesting and thoroughly recommended book, Mark Douglas analyses from a

psychological perspective the most common issues related to trading, offering the recipes to

face them in the best way possible.The firsts problems are related to pointing out the addiction

that new people experience when they can get a profit out from a random trade. With that

comes the expectation of getting a random winning trade now and then, even after a negative

streak and regardless of the overall scenario. The recorded memory of that great moment

where luck struck, motivates to keep trying.

Another severe problem which is the reason why even smart people fail at times is due to the

achieved success in other business endeavours.

A good entrepreneur relies on his skills to control the environment and the situation. However,

in trading, the winning factor lies in the ability to be able to adapt rapidly to the actual

scenario. Being able to react to different contexts makes it possible to make a profit from what

drives those changes.Trading inherently assumes the risk of a potential loss. What determines

the skills of a good trader is the reaction to a given loss. Nobody likes losing money, and when

that happens, it always has an impact on anyone’s mood.

A good trader needs to understand that this risk is part of the business, and accepting it makes

you on the right path to avoid spontaneous reactions which are mainly driven by uncontrolled

emotions.

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It happens the same when an excellent trading opportunity is missed. Even in this case, it’s

critical not to surrender to your emotions. Your compulsive ego wants you to chase pumps in a

compensatory effort, and that may be more counterproductive than anything.

Emotional control is critical, without it even the best technical analyst will be lost.

Another linked problem is about the risk perception. A good trader doesn’t rely on the result

of his last trade to evaluate his overall trading ability.

The same whole scenario inherently has the same risk. Don’t let a losing streak of trades

change your perception about the situation without an objective evaluation.

The market doesn’t care about your feelings. If you’re following your risk management rules

and your technical assessments aren’t being invalidated, keep trading the market according to

your set strategy.

Mark Douglas developed a well-developed concept known as ”the uncertain principle.”

It is not possible to predict the future with absolute accuracy. Anything can happen anytime.

Given that, as traders, we have to consider the probabilities for a given setup to strike in and

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adjust our mindset considering it. A trader needs to be in harmony with the market. Many

traders end up to challenge the market,

getting burned inevitably. Ultimately it’s better to adapt to the trend rather than try to fit the

market to your current mood or random idea.

Here are some of the quotes that I like the most from the book:

“I haven’t seen much correlation between good trading and intelligence. Some outstanding

traders are quite intelligent, but a few aren’t. Many outstanding, intelligent people are horrible

traders. Average intelligence is enough. Beyond that, emotional makeup is more important.”

“Ninety-five percent of the trading errors you are likely to make — causing the money to just

evaporate before your eyes — will stem from your attitudes about being wrong, losing money,

missing out, and leaving money on the table. What I call the four primary trading fears.”

“Why do you think unsuccessful traders are obsessed with market analysis? They crave the

sense of certainty that analysis appears to give them. Although few would admit it, the truth is

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that the typical trader wants to be right on every single trade. He is desperately trying to create

certainty where it just doesn’t exist.”

Moreover, finally here are five quotes from Mark Douglas’s book which should be marked

permanently on your skin, as a trader:

Five fundamental truths:

1. Anything can happen.

2. You don’t need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that

define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening

over another.

5. Every moment in the market is unique.

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 Tips By The Warren Buffet

1. Never Lose Money

One of the most popular pieces of Buffett advice is as follows: "Rule No. 1: Never lose
money. Rule No. 2: Never forget rule No. 1." If you're working from a loss, it's that much
harder to get back to where you started, let alone to earn gains.

2. Get High Value at a Low Price

In the 2008 Berkshire Hathaway shareholder letter, Buffett shared another key principle:
"Price is what you pay; value is what you get." Losing money can happen when you pay a
price that doesn't match the value you get -- such as when you pay high interest on credit card
debt or spend on items you'll rarely use.
Instead, live modestly like Buffett by looking for opportunities to get more value at a lower
price. "Whether we're talking about socks or stocks, I like buying quality merchandise when
it is marked down," Buffett wrote.

3. Avoid Debt, Especially Credit Card Debt

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Buffett built his wealth by getting interest to work for him -- instead of working to pay
interest, as many Americans do. "I've seen more people fail because of liquor and leverage --
leverage being borrowed money," Buffett said in a 1991 speech at the University of Notre
Dame. "You really don't need leverage in this world much. If you're smart, you're going to
make a lot of money without borrowing."
Buffett is especially wary of credit cards. His advice is to avoid them altogether. "Interest
rates are very high on credit cards," Buffett once said. "Sometimes they are 18%. Sometimes
they are 20 percent. If I borrowed money at 18% or 20%, I'd be broke."
4. Keep Cash On Hand

Another key to ensuring security is to always keep cash reserves on hand. "We always
maintain at least $20 billion -- and usually far more -- in cash equivalents," Buffett said in the
2014 Berkshire Hathaway annual report.
Businesses and individuals alike might get an itch to put liquid cash to work through
investments. "Cash, though, is to a business as oxygen is to an individual: never thought
about when it is present, the only thing in mind when it is absent," Buffett said. "When bills
come due, only cash is legal tender. Don't leave home without it."

5. Invest In Yourself

According to Inc.com, Buffett said, "Invest in as much of yourself as you can. You are your
own biggest asset by far." He echoed those sentiments in a CNBC interview when he said,
"Anything you do to improve your own talents and make yourself more valuable will get paid
off in terms of appropriate real purchasing power."
Those returns are big, too. "Anything you invest in yourself, you get back tenfold," Buffett
said. And unlike other assets and investments, "nobody can tax it away; they can't steal it
from you."

6. Learn About Money

Part of investing in yourself should be learning more about managing money. As an investor,
much of Buffett's job consists of limiting exposure and minimizing risk. And "risk comes
from not knowing what you're doing," Buffett once said, according to Forbes. The more you
know about personal finance, the more security you'll have as you minimize risks.
The lesson from this Buffett quote is to actively educate yourself about personal finance. As
Charlie Munger -- Buffett's partner -- put it, "Go to bed smarter than when you woke up."

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 References

 www.investopedia.com
 www.5paisa.com
 www.indiainfoline.com
 www.quora.com
 www.groww.com
 www.moneycontrol.com
 Trading in the zone by Mark Douglus.

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