What is Short Selling in Share Market?

What is Short Selling?

Stock Market is uncertain.Its dependent on current market scenario as like news, stock result, bank rate etc.All these factors affect the stock market.Its not true traders always makes money from purchased share and booked profit on sell of shares on high prices but most of time stock market goes down because of nifty expiry, stock result or credit policy than some trader or speculator sell stock on high prices and booked on lowest prices in intraday trading.Its trading technique known as Short Selling. 

Lets understand with example of Short Selling

A traders feels that a company xyz stock will fall because of any reason, he immediately sells it at the current price and he buys it as soon as the stock comes down.

Suppose 

Sell price of share XYZ=100 rs

Buy price of share XYZ=90 rs

Profit=Sell price of share-Buy price of share

          =100-90

          =10 rs

Identification of Short Selling in Share Market

a.)Bank Credit Policy

If the bank increase a interest rate , cash reserve ratio and repo rate.Its affect on intraday market and market goes down.Traders and Speculator can short selling and makes profit.

b.)Stocks Result

If the stocks result are not good,NPA is increased and company profit below expectation then mostly traders sell share because they knows cause to bad news company share will be down so that time Traders and Speculator can short selling.

c.)Nifty Expiry

When Nifty at expiry and future option are roll over into next month contract that time market goes down,traders and speculators can short selling.

d.)Politics Environment

If the election result is not in market favor of according to market expectations that time market goes down, trader can short selling.

e.)Corporate Action

If the company change in top management staff because of companies performance that time company shares goes down,trader can short selling.

f.)Company sell big proportion of shares

If the company sell big proportion of shares to other company for increasing liquidity and expand business that time company shares prices goes down.its best time for short selling.
So conclusion is this,all these factor effective for short selling.At that movement speculator or traders makes profit with intelligence in short time.

Hope you understand this article,What is Short Selling? If there is any question related to this article, then you can ask and comment.

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