The Hindu Business Line : Tech Tools

I have seen in these columns some Elliott Wave Analysis. Please suggest the approach so that I do not burn my fingers by following someone's tip blindly. Shivendra Tripathi

You are right in stating that following tips given by others, without sufficient homework from your end, is extremely risky. The first step to take for anyone desirous of investing in the stock markets is to read up as much as is possible about the functioning of the stock markets and about companies.

New entrants to the stock markets are better off `investing' in the stock markets rather than `trading'.

In other words, novice investors should buy with the intention of holding the shares for one year or more. Investing would entail reading about the company and industry and then buying the stock once you are convinced about the growth prospects of the company.

Once sufficient comfort level has been achieved with stock market investing, you can read about technical analysis and start studying charts using technical analysis. It is advisable to initially do paper trading based on technical analysis before actually trading in the stock market.

What does the term `market is range-bound' mean? What is the period of holding in the terms short term, medium term and long term? Sasi, Palakkad

A range-bound market is one that is moving sideways. If it is said that the Sensex is moving in a range between 10000 and 11000, it would mean that every time the Sensex reaches 10000, buying would emerge and push the prices up. Similarly, every time the 11000 level is reached, selling will emerge and pull prices down.

Unless the upper or lower boundaries are breached, markets will trend sideways. Not only markets, even individual stocks tend to get range bound at times. It is advisable to accumulate stocks when they are quiet and range-bound rather than buying them when they are speeding towards the stratosphere.

Different books would define short, medium and long-term differently.

On an average, analysts in India mean one-seven days when talking about the short term.

Medium-term would mean seven days to a month, intermediate term would mean one-twelve months and long-term would means investments that are to be held for more than one year.

What will happen when a stock that I hold gets delisted? What can I do with the shares? I am a long-time investor and do not read any financial paper on a regular basis. (I read i-flex may get delisted eventually). Padma Rao

When a company goes in for voluntary de-listing, a letter is sent to the shareholders offering to buy back their shares at a price fixed by the company. You can avail yourself of this offer and get your money back.

Please do make sure that your address is updated with the registrars of the companies, whose shares are being held by you.

Lokeshwarri S.K.

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