Answer / sai prasad

short selling is nothing but selling a stock without
actually possessing it. ex:- u know a stock of a cement
company which is trading at Rs.100 and u know that
infrastructure projects are not doing well and the worst
will be expected in next month.. so consequently cement
demand will come down.. now u will sell that cement company
stock at current price i.e, 100 without actually having the
documents in ur hand and u will say the buying party that u
will give the document in 45 days,, so in the next 45 days ,
as u expected, if price comes down by Rs.70 of the cement
company share,u will buy the share at Rs.70 and give that
orginal documents.. therefore ur thread is Rs.30...u gain
out there and viceversa..

Answer / vandana gupta

The selling of a security that the seller does not own, or
any sale that is completed by the delivery of a security
borrowed by the seller. Short sellers assume that they will
be able to buy the stock at a lower amount than the price
at which they sold short.

Answer / kaustubh khorwal

short selling is purly trading activity.
In this activity you sell shares at higher price
which is not in your demate A/c. i.e. Selling shares
is not your holding position. And want to buy in
lower price to square up your position.

Answer / prabhakar jadi

In stockmarket normally people buy shares and sell their
shares when they get good price so that they can get
profit. but in short selling first they sell shares without
having the shares. after that they will buy shares.this is
called short selling.(selling first and buying after in
market)people will do this when market goes in downtrend
sothat they sell at high price and after they buy at low
price if market getdown.

Answer / guest

short selling means the silling of those shares that are in
excess and there demand will decraese in future.

Answer / martinb

About "One Shot" Selling. That is a destock practice, as
when U got a large stock of one special Item, and get one
day to purge it out, no matter the price. You do then take
"one shot" ("one day") to deplete a full stock.

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Read the case given below and answer the questions given at the end. Krutika Designers Ltd is an Indian company engaged in designing shirts for an international shirt manufacturer. Its operations are currently restricted to designing shirts for the Indian market. The firm is interested in extending its operations to the European markets, but is restricted by its lack of knowledge about the latest fashions and trends prevailing there. Hence, the firm has decided to open an office in Finland for establishing a network in Europe that will give the firm access to the needed information. The firm feels that its does not have the capability of sustaining itself in the foreign markets in the long-term, and will be able to generate additional revenue from these activities only for the next 5 years. After that, the Finnish office will have to be closed down. The firm anticipates an initial investment of Rs.14 million. The project is expected to generate the following cash flows over the 5 years period. Year Cash flow (Finnish Marks) 1 2 3 4 5 10,00,000 20,00,000 50,00,000 50,00,000 30,00,000 These cash flows are expressed in terms of today’s money. The firm can claim depreciation in India according to the Straight Line Method. The salvage value from the project is expected to be nil. The Finnish Government does not provide any incentives for foreign investments. However, currently it is making an attempt to have better economic ties with India. Hence, it has decided to extend a loan of 50,000 marks to Krutika Designers. The loan will be at a concessional interest rate of 7%. The loan is to be repaid in 5 equal annual installments which will include the interest payments. The project will generate additional borrowing capacity of Rs.5 million for the firm. However, as the firm does not have any firm contract with the international shirt manufacturer, its domestic revenues are expected to be very volatile. Therefore, there is no surely that the firm will be able to absorb the tax benefits arising out of depreciation and additional borrowing capacity. The firm does not intend to indulge in any illegal money transfers. The current spot rate for the Finnish Mark is Rs.7.25/FM. The inflation rates in India and Finland for the next 5 years are expected to be 8% and 3% respectively. The exchange rate is expected to move in tandem with the inflation rates. Indian tax rate is 35% while Finnish tax rate is 40%. India and Finland have entered into a tax treaty whereby the earnings of the residents of one country are taxable in that country only. In India, the nominal risk-free interest rate is 11%. The same is 6% in Finland. The Indian nominal interest rate (including risk-premium) is 15%, while that in Finland is 9%. The nominal all-equity rate in India is 18%. 1. Comment on the financial viability of the project. 2. What are the different circumstances in which nominal all-equity discount rate and real all equity discount rate should be used for discounting the cash flows? Explain the rationale behind it. 3. Comment on the financial viability of the project if the firm is sure about being able to absorb the tax benefits arising out of depreciation and increased borrowing capacity. 4. Explain the concept of exchange risk and how it affects an international project. 5. How can the financial structure of a project be used to overcome repatriation restrictions? What are the additional benefits of such maneuvers?

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