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GAFLALEARNINGTHROUGHMOVIE

BY

SHASHIPRAKASH SAINI

MBA-IB

FMS BHU

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BULL MARKET AND BEAR MARKET

A market trend is the tendency of a market to movein particular direction over a period of time

A bear market describes a downward market trend

Whereas a bull market describes a upward markettrend

The terms bull market and bear market can be usedto describe the overall market or even sections orsectors of the market

Ex- the market is bullish on technology stocks andbearish on pharma stocks

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CONTD

The golden phase of theeconomy from 2000-2007was a great example of abull phase

If anyone bought stocksat that time , in hope ofselling them later athigher price that person

is called bull operator A bull market has

optimistic outlook , i.eprices are expected toincrease in future

Obviously , bull cannotlast forever and then

bears take over The bear operator has

pessimistic outlook of themarket

They expect market will

fall down for someconsiderable time

They make profit by shortselling

Bull operator Bear operator

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MOREANIMALTERMSUSEDINSTOCKMARKET

Chicken are thoseinvestors who are full

of undue fear to stepinto market

They are always afraidthat they will losemoney

Since returns are tiedto risks, they have tocontend to rock bottomreturns

Pigs are high-riskinvestors looking for theone big score in a shortperiod of time

Pigs buy on hot tips andinvest in companieswithout doing their duediligence

Professional traders lovethe pigs, as it's often fromtheir losses that the bullsand bears reap theirprofits

CHICKEN PIG

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HAMMERING

The rapid and concentrated sale of a stock thought tobe overvalued by the market. It performed by investorsand speculators who believe that prices are inflatedand that a period of liquidation is imminent

Hammering the market is achieved through large sale orders ormany small sell orders. In some cases, investors may evencollaborate on orders to attempt to push the share's price evenlower

Hammering is done in bull phase by bear operators sothat market can fall and comes in bear phase. Thus byshort selling bear operator can make profit

Whereas bull operator tries to maintain market in bull phase bypurchasing the falling stocks so that bull run continues

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HOWHAMMERINGWASTACKLED

In the early 1990s, the banks in India hadto maintain a particular amount of theirdeposits in government bonds

This ratio was called SLR ( Statutory Liquidity Ratio)

The government decided that the banksneed not show their details on each day,

they need to do it only on Fridays That meant that banks would sell bonds in the

earlier part of the week and then buy bonds back atthe end of the week. The capital freed in the startingof the week could then be invested

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CONTD

Lets say that there are two banks A (short) and B(plus). He took the money from A and went to Band said that he would pay the money on the nextday to B but he needed the bonds right now

But he offered a 15 % return for bank B for the one dayextension. Bank B readily agreed with this since it wasgetting such a nice return

Now since broker was dealing with many banks atthe same time he could then keep some capitalwith him at all times

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CONTD..

He takes money from A on monday, and tells B that hellpay on Tuesday, then he takes money from C onTuesday and tells D that hell pay on Wednesday and

the money he gets from C is paid to B and as a result he

has some working capital with him at all times if thisgoes on with other banks throughout the week

The banks at that time were not allowed to invest in theequity markets

Subodh Mehta had very cleverly squeezed some capitalout of the banking system.

This capital he invested in the stock market andmanaged to tackle hammering done by bear operators

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LIBERALISATION: ECONOMICREFORMS

The new policy attempted to remove unnecessary hurdles insecuring licenses, adjusting output to administered prices anddenying industrial licensing to companies. A number ofmeasures were undertaken in this regard

Fiscal stabilisation to check fiscal deficit to keep it at much lower level

Integration with the global economy by removing controls onforeign trade and exchange rates, lowering tariffs andrationalising their structure and substantially

Internal liberalisation to increase competitive pressure

Relaxing regulations regarding external capital flows andproactive policy for attracting FDI to encourage growth

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