Understanding Trading in Nifty


What is nifty?

One of the signs of a growing economy in a country is the stock market. The Indian stock market is complex to understand, yet there are some expert investors who are fascinated by the risks involved in it. It affects the overall performance of the economy. Trading of shares is the reason why the government, banks and industries keep a close watch on stock performance.

One of the indexes that interest retail investors, institutional investors and foreign investors is Nifty or commonly denoted as NSE S&P CNX Nifty 50. It is an index on the National Stock Exchange (NSE), comprising indices of top 50 companies across 21 sectors in India. These companies are the leading companies of India whose stocks are actively traded on NSE.

How to invest in the Nifty 50 Index?

  • Derivatives trading: These are financial instruments that derive their value from underlying asset and trading is mostly in the form of commodities, interest rates, currencies, stocks, etc.
  • Futures Trading: This is the contract between the buyer and seller for buying and selling of Nifty on a future date
  • Options trading: This option allows you to buy or sell Nifty on a future date at a specific price.
  • Index Funds: This is basically a mutual fund that allows investment in various indices, including Nifty to provide broad market exposure.

Achieve Higher Gains through Nifty Investment:

  • With proper research, you can invest in Nifty stock and take a trading call. Nifty futures and Nifty options have a high probability of offering high liquidity.
  • If you’re trading in Nifty, it offers intraday (buy and sell stocks on the same day) and short-term (buying of stock that is expected to go up in the short term because of momentum) opportunities
  • Large stocks cannot be manipulated. They are subject to market conditions; hence these stocks tend to perform when there is a turnaround in the market or a sharp rise in revenues and profits.
  • When the performance of Nifty 50 is outstanding, you will witness a rapid increase in the price of stocks. Appreciation is also an indicator that it’s time to reallocate and put your money into more quality ones.
  • You can keep track of Nifty and have a look at the changing trends through the technical analysis chart
  • Lower spread, also known as the bid-ask difference is the price difference in the quote of buyer and seller. If the difference calculation is on the lower side, trading costs will also below.
  • As an investor, you can hedge against any potential loss in the event of any adverse market movements and protect your trading position.

Should you trade in Nifty this 2020?

In 2019, only half of the Nifty stocks gained, while one-third gained over 15%. In the upcoming year, Nifty will continue to climb the wall of economic worry, and even analysts estimate the same trend to continue in 2020 as well.

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