6 months ago
The main purpose of short selling is Making money when the stock price falls of a Company.
What is Short Selling:
Short selling is the selling of a stock that the seller does not own at the time of trade.
A Short seller sells a borrowed stock in the hope of making money by buying it back at a cheaper price later.
If a person expects that Stock of a company will fall from 1000 Rupees to 400 Rupees in few days, he can borrow the stock from broker using a margin account and buyback the same stock before the settlement period.
The short seller will sell the Rs 1000 stock with the hope of buying it again back when the price falls to Rs 400.
If the stock actually falls, the stock seller buys the share back and closes his position. He earns the difference between the selling price and the purchase price, after deducting margin paid to the broker.
This is the main purpose of short selling: Making money when the stock price falls.
Hinderburg Research vs Adani Enterprises:
Recently Hinderburg Research company did Short Selling on Adani Companies Shares and after that they published a negative fake propaganda report about Adani Companies. Because of negative fake propaganda report about Adani Companies, it's stock prices went down heavily.
Since, Hinderburg Research company did Short Selling on Adani Companies Shares already now they sold all those Shares in Market and earned a lot of Money.
Business Analyst at HCL Singapore
6 months ago