Havala or Hawala (also, Making Up Price)
it is the rate fixed by the stock exchange for the purpose of working out the liabilities between the members and brokers at the end of the SETTLEMENT PERIOD in respect of unfulfilled contracts in specified securities which are to be carried over to the subsequent period. If members were to try and individually settle all carry over accounts, they would obviously be considerably confused due to the larger number of transactions at varying prices they may have entered into. As such, for determining the liabilities of members via – a – vis the unfulfilled contracts, the stock exchange decides a rate for each specified share, known as the havala rate, or making – up price. The havala rate is generally fixed at the level of the closing price of the share on the last working day of the settlement period.
Havala also means illegal trade in currency exchange, it involves selling of foreign currency at black – market rates; also clandestine transfer of foreign exchange abroad in lieu of Indian currency paid here.
Head and Shoulders
A technical analysis term used to describe a chart formation in which a stock’s price:
1. Rises to a peak and subsequently declines.
2. Then, the price rises above the former peak and again declines.
3. And finally, rises again, but not to the second peak, and declines once more.
The first and third peaks are shoulders, and the second peak forms the head
A pattern in a share price chart with two short bulges on either side and a large one in the middle, resembling the head and shoulders, technical analysts see this as a signal for a further fall in prices. In the reverse pattern, head and shoulders down, i.e., the head and shoulders forming below the line, when the price in the right shoulder has touched the baseline, the signal is for a continued rise.
Hedging Against Inflation
Protecting one’s saving from the loss of value through inflation by investing in such items whose price rises with the general increase in prices. this may indicate that fixed income securities are out, equity shares and other items which rise in value are in. Historically, the stock market has always kept pace with inflation.
Inefficient Market
THE EFFICIENT MARKET hypothesis holds that the stock market, at any time, is possessed of full information on the shares and that nothing is unknown which can have a further influence on a share’s future prices. IN an inefficient market the potential of all shares is not fully known or remains neglected. Shares of small companies with growth potential may remain low-priced in such a market, or turnaround situations may pass unrecognized for some time.