1. Market Risk: This is basically a macro level risk and applicable to all the stocks traded in the share market. For example, if the stock market is in a bullish trend and if an investor takes short position then it is like trading in opposite direction. It is always advisable to trade in the direction of the market to mitigate the market risk. Secondly, macroeconomic indicators like inflation and interest rate also pose market risk along with political risk.
2. Regulatory Risk: The sectors like telecom, pharma, and airline where the sector regulators are very strong poses a regulatory risk. Any adverse regulation can directly impact the profitability of the companies.
3. Business Risk: It is specific to the company. For example, contribution of digital business in IT or competition in FMCG are risk to company thus are business risk
4. Sector or industry risk is for all the companies of the sector. For example, automation in IT or cheap steel import poses threat to all the companies in the sector.
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