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or regional activities that might adversely affect the sector you are invested in. A new party in power after the general election or government policies on tax, import/export duties, central bank interest rates etc. can have huge impact on your investments. In today's era of globalization, all markets in the world are interlinked. A big fall in European stock market can have negative impact on Asian stock markets and vice versa. So, you have to have brief knowledge of other major global markets as well. If you are well versed with the world affairs, then you are in a position to take the right decision at the right time to secure your investments.

5. Follow the big fund strategies: Try to follow the investment strategies of big and successful mutual funds. Look for the sectors and stocks they are investing heavily on and invest in those stocks. Also keep an eye at what they are selling off.

6. Set your Target: Another big dilemma in stock market is when to enter or exit. Ideally you should enter at the bottom most price and exit at the peak. But practically you will never find those bottom or peak. For entering, look at how much it has fallen from the highest level, look at the valuations. If you are waiting for an entering opportunity, then enter when the rate of fall has slowed down, the price has more or less stabilized and the valuations look attractive. Similarly, for exiting, first set some profit target. If the stock continues to grow beyond that then sell off when the rate of rise begins to slow down and the price stabilizes in a range.

7. Use stop loss, partial profit booking and averaging tactics to minimize the risk: In spite of taking all cautions, one or two of your stocks might generate loss. What should be your tactics then? First thing is not to panic. Just wait and watch. Things might be alright within a few weeks. But if there is a steep fall, or there is something adversely affecting the fundamentals of the stock, then set a stop loss target for you. This is a price up to which you are ready to sustain loss. If the price breaches your stop loss level, then sell it off. There will be some loss, but your entire investment in the stock will not be wiped away. There can be another situation of temporary fall; there is nothing wrong fundamentally with the stock, but there is a temporary fall. This might be a good opportunity to buy more of this stock at a lesser price now so that the average price of this stock will be less than your original price. This is called averaging out. For the stocks which are making high profits, you can make partial profit booking by selling a portion. This way, you get some real profit and some potential higher profit if the stock rises further.

Investments in stock market need to be as risky as some people say. By following some simple rules and investing prudently you can enjoy high returns from the stock market, without going for gambling.

Learn more about this author, Malabika Ray.
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