Profit Up But Stock Down
It’s a Quarterly results season and we are facing heat! Why? Because we are witnessing even if the stock (or business) has given good quarterly results, still sometimes it is going down in prices. It’s because many of us think that The Stock Market runs on automation but no it’s completely wrong.
The Stock Market always runs on the basis of DEMAND & SUPPLY. Just after reading the news, we think that this XYZ co. the stock has given 2 fold returns and it will go up tomorrow. But why we forget, that this news is not in our hands only, It’s in hands of Smart Money (rich traders or investors) also, who understand this psychology that many retail investors or newbies will buy this stock today or the next day. So, they will check the volume of the stocks and make a permutation and combination of stocks and SHORT SELL the particular stock which will give the Smart Money (rich traders or investors) a quick return on their investment Or who knows, it can be an opportunity for investors to book profit, because these rich investors hold shares quantity in lakhs and millions, so to sell this much quantity in parts, they can’t miss this opportunity.
As they are getting so many buyers to buy their shares. Always remember EVERY SELLER NEEDS BUYERS, to convert their book profit (profit in DEMAT account) into real profits. They get this opportunity rarely in some shares, so, they will make the most out of it. Suppose, I am a retail (small) trader or investor and you are an intelligent trader with lots of money, So, you have seen that particular XYZ co. has given a 4fold growth in profits and you understood one psychology that there might be some people who are definitely getting excited about it. Whereas I am sitting on the other side and actually getting excited to buy this share tomorrow. So, let’s suppose hypothetically, you have seen that today stock traded for a worth of 2 crores only and you made a calculation with permutations and combination to short the stock by 3 times i.e 6 Crores. Guess what there are 90% chances that the stock will get more supply and you (rich investor) will end up in profits, whereas I (small investor) will end up in losses. Well, when the stock will fall the mainstream media might give reasons like, comparatively the stock hadn’t performed well and that’s why fallen down, or it’s because of the asset quality, which can be true sometimes, but dear friends it’s not on automation, someone is pressing a sell button actually on the other side (maybe for booking profits).
Well to be honest I never trade on news! Also, I don’t believe in getting rich quick like this! If anyone is trading like this, make sure one must read a full detailed report of the quarterly or annual result and then shift to Technical analysis and then make your decision. Hope that helped! If you have any problems, leave a comment below, I will be sure to follow up with you all. Feedback appreciated!