Inflation; Types and measures

 Inflation is a term used in Economics which is used to measure the rise in general level of prices for a bunch of goods and services over a period of time.When the price of a commodity or service increases the purchasing power of currency decreases.It results in the loss of value of money.Then each unit of currency can buy only fewer goods and services.
 Inflation can affect the economy of a country, positive and negative, in various ways.Economic experts are of the view that higher inflation is caused by the excessive growth of the money supply.
 If inflation gets totally out of control it affects the normal workings of the economy.This is called hyper inflation. Hyperinflation can lead to the abandonment of the use of the country's currency.
 There are two types of inflation
1. Demand Pull inflation- When there are less goods and more buyers, the demand increases.If the supply can not expand to meet the demand inflation occurs.This type of inflation is called demand Pull inflation.
2. Cost Push Inflation- Due to rise in input costs such as rapid wage increases,increase in corporate taxes and rise in imported raw material prices due to weak currencies the cost push inflation occurs.
 Inflation Rate
The inflation rate is the percentage rate of change of the overall price level of an economy over time.
 Measures of Inflation
  Inflation is usually estimated by calculating the inflation rate of a price index. usually Consumer Price Index or Wholesale price Index (WPI) is used to measure Inflation. In addition to this there are seven other important measures.producer price index (PPI), personal consumption expenditure (PCE) deflator, and gross domestic product (GDP) deflator, and a core version of each, which excludes food and energy.
Consumer Price Index (CPI)
The Consumer Price Index (CPI) measures the prices of a bunch of goods and services purchased by a 'typical consumer'. In other words, the Consumer Price Index measures the changes in the cost of living.Some economists are of the view that the CPI overestimates true inflation by up to 1 per cent.
Producer Price Index (PPI)
The producer price index (PPI) measures the average change in the selling prices received by domestic producers to consumers and other businesses.Several products are sold to other businesses rather than consumers.So it differs from the CPI. producer price index measures both changes in revenue and changes in output.
Personal Consumption Expenditure (PCE) Deflator
The Personal Consumption Expenditure (PCE) measures the average change of price paid for all domestic purchases by all consumers.It measures the actual and imputed expenditures of households which also includes data pertaining to durable and non-durable goods and services.PCE deflator is also known as the PCE price index (PCEPI), 'PCE price deflator', and the 'Implicit Price Deflator'.
 The Personal Consumption Expenditure (PCE) is a volatile measure. Core PCE (CPCE) price index is less volatile than PCE Deflator which excludes the seasonal food and energy prices.
GDP Deflator
 In Ecocomics, the gross domestic product (GDP) deflator is used to measure the average change over time in the level of prices of all new, domestically produced, final goods and services.
It is calculated by using the following formula

GDP Deflator= Nominal GDP/Real GDP*100

Core Indexes
In addition to cite inflation numbers the economists usually refer to the Core version of that index.The core version excludes some volatile data.For example, In calculation of PCE the economist uses the oil and energy prices.But in Core PCE they exclude food and energy prices.

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Short term, Mid term and Long term stock trading

Short term

 Short term trading is an integral part of delivery trading.Trading of shares done from three days to six months is called short term.It depends upon Company news, reports, consumer’s attitudes and results.It is very risky and unpredictable due to the volatility of stock markets.
It is possible on future and options also in which the time duration is a few days to weeks.
 The trend of the stock is very important in short term trading.Chart pattern, Exponential Moving Average (EMA), Simple Moving Average (SMA), Moving Average Convergence-Divergence (MACD) and Relative Strength Index (RSI) have important role in short term trading.Pivot points, Camarilla levels, fibonacci retracement levels, fibonacci pivot levels, wave levels are also used to predict the short term trend.After realizing the trend one can buy or sell stocks. 

Mid term

 Mid term or medium term indicates intermediate investment.Analysts and traders have different opinion about the period of mid term.One intraday trader who holds the stocks for three to four weeks may consider this period as mid term.One long term trader who hold the stock for one to three years may consider this period as mid term.Most analysts and traders are of the view that share trading done from six months to less than one year is mid-term.Mid-term trading is also based on news and company performance.One may do the medium term stock selection on the basis of momentum and the fundamentals of the stocks.One may enter the trade after a break out above resistance or a break down below support according to his own trading system.As on Short term trading Chart patterns, Moving averages like EMA and SMA, MACD, RSI and other technical levels affect the trend.

Long-term

 Usually share trading done after one year is called long term trading or long term investing.Company's fundamentals, performance, news and market conditions affect long term trading.Buying under priced stocks with strong fundamentals (Value investing) work in long term trading.In long term trading small-cap and mid-cap stocks offer high profits than large-cap stocks.It is because small cap and med cap stocks earnings can grow easily than large caps.Growth rate and estimated returns are great concern while purchasing shares on a long term basis.

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Share trader, share trading and important types of stock trading

 The individuals or corporations who are engaging in the trading of securities is called 'stock trader' (share trader).The stock traders are mainly stock speculators.It is very acceptable to public, because the capital needed for stock trading is very less compared to stock market investing.They usually try to get profit from short-term price volatility.It is very risky as the market direction is unpredictable. On the other hand stock investors put money to buy securities which offer returns (such as interests, income or capital gains) for an extended period of time .It may be several months or years.The fundemendals of the stock is very important in investing.
 Buying or selling of shares in stock market (share market) is known as share trading (stock trading).
 There are two important types of share trading.Day trading and Delivery trading.

Day trading
Purchase and sale of the same scrip/indice on the same trading day is called day trading.It is also called as 'intra-day trading' and 'daylight trading'. All positions usually closed before the market close.That is One must sell stocks before 3.30,that he bought on the day and buy scrips that he sold on the day.Selling before buying is possible on delivery trading.But you must buy the scrip before market close.It depends on speculations.It is safe compared to short term trading, because there is no over night risk.Holding stocks which bought on intraday basis is some times risky.
 With the advantage of electronic trading and margin trading, day trading has become very popular among home traders.Stocks, Stock options, commodity futures, currencies, future contracts, equity index futures, and interest rate futures are some financial instruments available for intraday trading.
 The main risk factor of intraday trading is it can be either extremely profitable or extremely unprofitable.So it is important to keep stop loss on intraday trading.It is possible to make heavy profits on the day in day trading.So intraday traders are sometimes portrayed as 'gamblers' by investors.

Delivery trading
According to some analysts and traders, delivery trading is secure compared to day trading.Delivery means the legal transfer and receipt of ownership rights.You have to take the delivery of shares.There is a one plus two settlement (One trading day and two other days) for delivery trading.After getting scrips into your demat account you can sell them at any time.Normally it will take up to three days.You should have sufficient money to buy shares on delivery basis.Selling before buying is not possible on delivery trading.
 There are some advantages and disadvantages of Delivery Trading.The main advantage is that, the Loss of Fear of Money is very less compared to Intraday Trading. Even if the market price of your stock reduces, you can still wait for more days to get your expected price.Another advantage is that you can get dividend from your investments.The split of shares, amalgamations and bonus issues may also profitable to you.The disadvantage of Delivery Trading is the brokerage charges for Delivery Trading is high compared to day trading.Another disadvantage is that market crashes and some other factors may affect delivery trading.

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What does 'Share' and 'Share holder' mean in Stock market

What is share?
 For raising capital the companies divide its ownership into small parts and issuing to individuals or organizations.Each part is called a share.Shares of Corporations, mutual funds and Organizations are available.
 In financial markets, such as stock markets and commodities markets share is considered as an unit of account.The share holders of the company will get income from shares, which is known as 'dividend'.

Share Holder
 A share holder is a person or an institution who carries share in a company.Thus he is the owner of a part of that company.A person holding maximum shares in a company has maximum ownership.They will be the directors or Chairman in the company.
 A share holder is also known as 'stock holder' or a 'stake holder'. He can purchase the shares of public or private corporations.He has the right to sell his share any time.He is also eligible to nominate directors or vote for the directors nominated by the board.He will get all dividends declared by the company and also he can purchase new shares issued by the company at any time.
 A share holder purchases shares from an institution called Stock or commodity or currency market.The purchase process is going through a broker.
 One can buy shares from Primary market through initial public offerings (ipo) or bonds.They provides capital directly to the company.How ever the majority of share holders purchase shares from secondary market, in this case the share holder not directly providing capital to the company.

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Stock exchange; List of important stock exchanges in India and the World

What is stock exchange?
 Stock exchange is defined as an institution, that provides various services for brokers and traders for the purpose of trading in stock, bonds and other securities including derivatives.It also provides facilities for issue and redemption of securities and the payment of income and dividends.Shares issued by various companies, derivatives, pooled investment products, bonds and mutual funds are traded on stock exchanges.
 Modern stock exchanges have trading floor and electronic trading systems.Only the securities listed on stock exchange are available for trading.Only members of the stock exchanges can trade.Physical and electronic form of shares are available for purchase.Online trading facility  is available to traders through brokers.

List of Major stock exchanges in the World

Exchange                      Country/ Region

NYSE Euronext      United States/ Europe     New York City
NASDAQ OMX      United States/ Europe     New York City
Tokyo Stock Exchange      Japan     Tokyo
London Stock Exchange      United Kingdom     London
Hong Kong Stock Exchange      Hong Kong     Hong Kong
Shanghai Stock Exchange      China     Shanghai
TMX Group      Canada     Toronto
Deutsche Börse      Germany     Frankfurt
Australian Securities Exchange      Australia     Sydney
Bombay Stock Exchange      India     Mumbai
National Stock Exchange of India      India     Mumbai
SIX Swiss Exchange      Switzerland     Zurich
BM&F Bovespa      Brazil     São Paulo
Korea Exchange      South Korea     Seoul
Shenzhen Stock Exchange      China     Shenzhen
BME Spanish Exchanges      Spain     Madrid
JSE Limited      South Africa     Johannesburg
Moscow Exchange      Russia     Moscow
Singapore Exchange      Singapore     Singapore
Taiwan Stock Exchange      Taiwan     Taipei

The list of stock exchanges in India
[Maintained by the Securities and Exchange Board of India (SEBI)]

Ahmedabad Stock Exchange (ASE)
Bangalore Stock Exchange
Bhubaneshwar Stock Exchange (BhSE)
Bombay Stock Exchange (BSE)
Calcutta Stock Exchange (CSE)
Cochin Stock Exchange (CSE)
Coimbatore Stock Exchange (CSX)
Delhi Stock Exchange (DSE)
Gauhati Stock Exchange
Hyderabad Stock Exchange (HSE)
Inter-connected Stock Exchange of India (ISE)
Jaipur Stock Exchange (JSE)
Ludhiana Stock Exchange
MCX SX Exchange, Mumbai
Madhya Pradesh Stock Exchange, Indore
Madras Stock Exchange (MSE)
Magadh Stock Exchange, Patna
Mangalore Stock Exchange
National Stock Exchange of India (NSE)
Over the Counter Exchange of India (OTCEI)
Pune Stock Exchange
Saurashtra Kutch Stock Exchange
Vadodara Stock Exchange,Vadodara (VSE)
UP Stock Exchange (UPSE)
United Stock Exchange of India (USE)

Commodity Exchanges in India

Multi Commodity Exchange of India Limited (MCX)
National Commodity & Derivatives Exchange Limited (NCDEX)
Indian National Multi-Commodity Exchange (NMCE)
Commodity Exchange Limited ICEX.

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