 "Avoid falling prey to mis-selling of insurance")
'Capitulation' refers to a phenomenon where investors liquidate their positions during periods of extended decline in the stock price for the fear of incurring a bigger loss. This panic selling may even emerge due to margin calls and increase in futures & options (F&O) margins, etc. On the other hand, some believe that capitulation can lead to exhaustion of selling pressure and hence provide a fresh buying opportunity.
What does capitulation tell you?
o The stock market is likely to see a bottom once the capitulation subsides.
o Squaring off one's position during capitulation gives traders a sense of relief
