Investing in Indian equities is also not easy as it looks A lot of investors go about their investments in an illogical way. They are given a tip from their broker on grounds of some rumor or news. They impulsively buy the scrip and afterward wonder why they bought the stock.
Such Behavior is foolish and must be avoided. The moment you receive a tip on a stock, confirm the news on bse India or nse India website. The news, if any, will be on these websites; be it dividend payoffs, information, earnings, corporate move to buy another company, the fight of top management, or any other news.
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Broadly one should abide by the following guidelines before Investing in Indian equities or elsewhere in the world:-
1. Business of the Company
Buy stocks of only those businesses that you comprehend. Once you have bought a stock, maintain a watch on the quarterly results of that company and also keep watch on the prevailing trend in the sector of that stock.
2. Study the past performance
All companies present details of their fiscal operation in their yearly reports. Analyze their past performance and then start investing in Indian equities.
3. Know the promoters
The Management team and promoters of a company are key individuals who bring growth to a business. Invest in businesses that have good promoters, and experienced administration, and where promoters hold more than 40% of the shares.
4. Future outlook of the company
Although an organization could have done well in the past, it is not required that it will carry on performing well in the time to come. Keep a close lookout on sector trends and market trends. You can know this by reading the views of financial professionals.
5. Stock price
The share price of each company fluctuates constantly on the stock markets with investors buying and selling the shares. The cost at which a person is conformable to buy or sell a share of a business is the perceived value of the share of the company taking into thinking the company’s present business and future business growth. Besides this, investor opinion plays a large role in the pricing of stocks.
It is significant that prior to buying a stock or investing in Indian equities, you evaluate whether the price of that share at which it is known for purchase, is adequately valued i.e. it is not over-priced. Likewise, when you sell, you need to be certain that you are not selling dirt cheap. To help you evaluate this, you may involve a popular ratio called the Price/Earning ratio (P/E ratio). The P/E ratio is based on the following formula:
P/E ratio = Market price of the that share/Earning per share (EPS)* of that stock
*EPS = Profit After Tax (PAT)/ Total number of shares issued by the organization
{“/” means divided by}
You can find info on the EPS, PAT, and the total number of shares issued by the company in its annual report. Once you have bought a stock after doing adequate research, then you must not sell the stock in a hurry if it falls by 5-10%. Share Tips of Investing in Indian equities recommends investors to be aware of the technical tools for measuring stock performances before investing and managing personal finance.