How To Start Invest In Share Market

How To Start Invest In Share Market – Profits in the stock market can be made by doing your own analysis, although you can take into account the opinion of others to make a decision. In this article, I will guide you step by step on how to pick great stocks and start investing in the stock market.

You can learn about stock investing with just Rs. 5000 investment. If you don’t have a demat account we suggest you to open a demat account and trade now with new technology in the market many players are offering same day offer and free demat account opening.

How To Start Invest In Share Market

Learn the method and apply it by investing 5000, if you earn 5000 in the first year, the same method can be used with Rs. 5,00,000 investment to earn Rs. 5,00,000 as future earnings.

Stock Market Courses & Equity Trading For Beginners

There are two different methods of profiting in the markets and which of these two methods are used by most of the top investors around the world to create their own wealth.

Trading and value investing are different things that an investor should understand before investing in the stock market. Trading focuses on making consistent profits over a shorter period of time, regardless of whether the markets are rising (bull) or falling (bear).

Trading in bullish markets involves buying and selling at a low price and selling at a higher price for a short period of time. In falling markets, they profit by selling higher and buying lower, which is called going short.

Since the trading style involves entering and exiting in a shorter period of time, the holding period of the stock is not more than a few minutes or just a day or in some cases not more than a few days. People who practice trading style use tools like technical analysis which uses complex indicators like moving averages, stochastic oscillator to predict the future movement of stock prices.

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Trading can be risky (big losses) due to high volatility in stock prices. If you don’t have a clear strategy and are not fast enough, you can end up with huge losses, wiping out all your money.

The biggest investment advantage that investors get from holding stocks for such a long period of time is the benefits of dividends, stock splits, and most importantly, the sharp increase in stock prices that comes from the fact that the underlying business (that stock) is profitable over the years . . Reference is made to such reserves. there are many bags for multiple returns that they create for value investing practitioners.

Another advantage that value investing offers over trading is that one is insulated from stock price fluctuations caused by external events or business downturns and believes that the stock price will eventually recover, rewarding investors with handsome profits.

People who practice value investing use fundamental analysis to make stock investment decisions. In fundamental analysis, you ignore day-to-day price fluctuations and instead look at a company’s core business, the industry it operates in, financials, quality of management, etc. you focus on learning.

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Because traders aim to make a quick profit of 10-20% on one stock and then sell it to move on to other stocks. That way you can make a profit but never accumulate wealth.

When you trade, you pay a 15% short-term capital gains tax on every profitable trade you make because your holding period is necessarily less than a year. In contrast, with value investing, if you hold the stock for more than a year, your capital gains tax is 10%, whether your gain is Rs 100 crore or Rs 100 crore.

There are thousands of stocks listed on BSE and NSE and it is almost impossible to go through all of them by going through all their financials. So for an initial review, you can use the following easy-to-apply selection criteria to filter out stocks whose fundamentals look strong, as shown below.

Now that you’ve filtered out stocks with good fundamentals based on #1, learn more about those stocks by reading as much as you can about the underlying company. By learning more about the company, you will be able to understand how the company works and answer three key questions

How To Start Investment In The Share Market?

Finally, if you don’t find a stock (company) that you immediately understand, spend some time researching the company and its sector.

In business terminology, Moat is the competitive advantage one company has over another in the same industry. The wider the moat, the greater the company’s competitive advantage and the more sustainable the company. This means that it will be very difficult for competitors to displace this company and take its market share.

It can be brand power, intellectual property rights and patents, network effects, government. regulations governing barriers to entry and others.

For example – TATA Motors has a strong brand name, pricing power, patents and huge market demand which gives it a wide moat which acts as a barrier against other companies.

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A high level of debt poses a serious risk to the company. Debt to equity ratio and current ratio were some of the selection criteria we used to filter stocks.

These two ratios indicate how much a company relies on debt capital (debt) to finance its growth and how well the company can meet its short-term capital obligations.

So when picking a stock, apart from these metrics, look at how the company has managed its debt over the past few years. A company that reduces debt will automatically increase its earnings, which is a positive sign of the company’s financial health.

One way to do this is to examine the company’s balance sheet, which lists the company’s current liabilities and long-term debt. Generally, long-term debt is debt that is due in 12 months. Current liabilities include the company’s debts that are due within a year.

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Companies with too much long-term debt will find it difficult to service that debt because most of their capital is diverted to interest payments, making it difficult to use the money for other purposes.

This creates a continuity risk and can lead to the bankruptcy of the company. The long-term debt ratio reaches 0.008

RoE is the percentage of a company’s net income that is returned to shareholders as value. This formula provides investors with an alternative measure of a company’s profitability and calculates the efficiency with which a company is making a profit using the funds invested by shareholders.

RoCE is a key indicator of how efficiently a company uses all available capital to generate additional profits.

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A company with a high RoE and RoCE indicates a high potential for growth in the company’s value in the future.

It is very important that the shares in which you plan to invest, as well as the company, are managed by honest, transparent and competent managers. Management includes promoters, CEO/MD, CFO, among others.

Fraud management is one of the reasons some people don’t trust the stock market with their savings. There have been many cases in the past where executives of listed companies engaged in shady dealings, indulged in accounting fraud, defrauded shareholders and SEBI, causing huge financial losses to investors.

No matter how good the company is, if you buy a stock at a high price and the future of the stock does not live up to expectations, you will lose money.

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Creating a portfolio is nothing more than creating a basket of stocks and allocating a certain percentage of the total amount that can be invested in each of them.

There are many investors who choose one or the other method depending on their capital allocation strategy and are successful.

In terms of allocation, limit any single stock to no more than 20% of your entire portfolio. For example, if your investment amount is Rs 1 lakh and you plan to invest in 5 stocks to build your entire portfolio, you should not invest more than Rs 20,000 per stock. Of course, you can choose to allocate only 5 or 10% to stocks that you think have more risk.

You don’t need an elite MBA or finance degree to know how to invest in stocks. Some of the best investors in India and the world have a very modest and normal academic background. Legendary investor Warren Buffett defined investing as “forgetting to consume now in order to consume later.”

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Investing your money regularly can multiply it many times over time. Therefore, it is important to start investing as soon as possible and after saving money for this purpose. The stock market is also a good place to start.

Whether you have $1000 or just manage

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