Support And Resistances ( Why Exist?)

All market participants, be it a long term investor or a short term investor, have heard the words "Support" and "Resistances". Everybody understand their meaning, but only a small number of persons i talk with knew why they exist.
Recently i got a chance to meet a person who has an experiance of more than 15 years in this line, he tried to explain to me the reasons behing supports and resistances, this is what i understand.
Please all friends , if somebody can add a value to my understanding below please comment.

Support And Resistances
Support and Resistances are price points where lot of activity happens. Better call them pivot points.

1.) Every investor , be it a short term investor or a long term investor invests with a target in mind. These targets are not decided by the Resistances given by companies but price points derived by the investor himself by judgeing the performance of the company.It could also be because of the percentage return required by an investor.

2.) Another Reason , that over a period of time these get stronger is because once a stock price stops or remains at a particular level large quantities of shares changes hand, due to this groups of investors get formed. These investors have one thing in common , that is the price range ( short range) at which they have bought the stock. For Example, RPL has lots of investors who have bought the stock at a price level of Rs 60.
Because of these investors , any time a stock reaches this level , supply gets dried out as they are not willing to sell their shares at the level they purchased and hence it becomes a support level.
Similar arguments applies for Investors who sells there shares also. For example, In reliance many investors sold there shares in the range of 2900 and 3100 , they are not willing to buy shares at these prices, if stock goes up, they can think of buying it again, or if it falls they can think of doing bargain hunting. But at the same level, only few buys again, due to this phenomenon, that range can become a resistance level as buying dries down.

3.)Round figures are one of the important pivot points because, at these points profit booking or bargain hunting generally comes, and hence they generally becomes Support or Resistances.

These Support levels and resistances gets made and break everyday, but if seen in the graph with these points in mind do provide good entry and exit points.
Please do leave your suggestions and comments.

Financial Technologies MCX IPO

Financial Technologies unlike other software companies is not dependent on arbitrage business from the US , but it is growing doing genuine business in India and abroad. Holder of MCX and Dubai Bullion Exchange ( dont know the exact name) it is also major player in providing exchange technology. MCX is going to get listed and also Fintech is divesting its stake at attractive valuations, causing funds to be available to the company. For long term perspective since the management is good and efficient and intelligent , since the company has the talent i have put my money on this stock. This stock has run up quite a bit in last to last year and has consolidated for a long period , MCX ipo can act as catalyst or trigger for the next bull run. So watch for this stock folks as for a period of 5 years, it can give you some handsome return, may wht the market behaves.

Hotel Leela

Hotel Industry in india is going through a phase in which everybody is trying to scale up the number of room , but demand is outpacing every effort causing huge shortage of rooms , specially in business oriented cities like mumbai bangalore and Delhi. This Huge shortage is the reason of room rates rising continuously to become one of the costliest in the world and still rising. Hotel Leela awarded one of the best hotels in corporate class and luxury is cashing big on this and buying out properties which in future would not be in reach to Hotel owners. This kind of property is the best thing that can happen to a Hotel company. Hotel Leela is also ramping up its room capacity and demand a higher premium than its competitor because of its quality. I wont go too detail into valuations, but after this major correction , it is awailable at approx 45 % discount to its all time high and 40 % off its recent highs. According to me its a decent buy for the long term investor , my significant percentage of portfolio is filled with Hotel Leela only.