hi Abhi,
I have a small doubt.i'm sorry ,it's not related to the discussion going on...
What is the reason behind the gap up and gap down opening of scrips? is there any technical or fundamental reasons behind that?
Thanks
The gapping up is done rapidly usually very early in the day's trading and will certainly have emotional impact. The action is usually designed to try to suck you into a potentially weak market and into a poor trade, catch stop losses, or panic traders in general.
Beware against confusing these two types of action. Weak gaps up are always into regions of new highs, when news is good and the bull market looks as though it will last forever. The same action is also seen in a stronger type of market, but in this second case you will have an old trading area to the left at a similar price level where there are always locked-in traders who have seen substantial paper losses but have refused to be shaken-out by any falls. These old locked in traders want only one thing, to get out of the market at a similar price of the one they first started with.
Professional traders that are still bullish know this. To encourage these old locked-in traders not to sell professional traders will mark or gap the market up and through these areas as quickly as possible.
Wide spreads up are designed to lock you out of themarket rather than trying to suck you in. This will tend to put you off buying, as it goes against human nature to buy something today that you could have bought cheaper yesterday, or even a few hours earlier. This also panic's those traders that shorted the market on the last lows encourage on by 'bad news' which always seems to appear on or near the lows. These traders now have to cover their short position [buying] adding to the demand .