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How to Pick the Right Stocks in Stock Market

Are you looking to increase your financial standing? If so, you might want to explore the world of stock investing. In this article, we’ll discuss what stocks are, how they can help you make money, and the different types of stocks you can pick from when looking to start investing. We’ll also go over some tips on how to choose the right stock picks in the stock market. Read on to find out more!

What is a Stock?

A stock is simply a type of asset which is essentially the part of a company. Say if you invest 10,000 rupees in a company, you get shares worth that amount on the current valuation of the company. As the valuation of the company rises, so does the price of this stock. Along with dividends and earnings, there are many other things to take into account when picking stocks. But for the most part, the following are the main things you’ll want to keep in mind when picking stocks.

Tips on How to Buy Stocks

Regardless of how you buy your stocks, you’ll want to make sure you choose the right stock at first. There are many ways to do this. One way is to do your research and find out which stocks are performing well. Then, you can look into the year-on-year financial reports of that company and see if they are the right stock to buy.

Check out this list to get a quick overview of how to pick the best stocks:

  1. Look out for current trends in the market. Although you should always invest time in technical analysis of the stocks, sometime it is profitable to follow the wave of trends for short term buying and selling

  2. Always look at the debt levels and the P/E ratio of a company stock before buying. It is not wise to invest in a loss-making company, or a company with too many debts. Since such companies may not sustain over a long period of time.

  3. Keep an eye on the market events such as budget announcements, changing repo rates, and socio-economic events. It will help you cushion any chances of losses for unexpected rise and fall in the stock market prices.

  4. Check out the dividend history of a stock. Companies that pass regular dividends to their shareholders are very likely to stay longer in business and also bear a sense of responsibility.

  5. Analyze all the technical aspects before buying shares in a company. Things like P/E ration, rupee cost averaging, and other technical elements should be taken into consideration into investing. Follow this link to check out the top course to learn about stock markets in India.

  6. Always diversify your portfolio and never put all your eggs in one basket. Make a mix of blue chip, short-term, long-term and other stocks.

  7. Look for companies with good management since it gives you assurance about their promising future. If you do not have a significant capital to risk, never invest blindly in any stocks based upon intuition or unprofessional advice.

Best Industries to Make Money in the Stock Market

There are many different types of stocks you can pick from when aiming to make money in the stock market. Here are a couple of the most common ones:

Growth stocks: Rather than being an industry, growth stocks are stocks from companies experiencing a phase of high growth. During this time, the valuation of the stocks of such companies rises quickly and gives their investors a great chance of making quick money.

Income stocks: These stocks provide the investors with a regular income in the form of dividends. Although, the value of dividends may fluctuate as it is dependent upon the profit/loss statements of the company. . 

Value stocks: Also known as undervalued stocks, these are the stocks trading at a lower than normal rate. So these stocks offer you immense potential in earning a good profit . You can find value stocks in just about any industry.

Real estate stocks: Real estate has always been a high-growth sector and prices of properties tend to increase by significant margins over the years. Investing in real-estate stocks is a great way to earn incredible income. However, you must stay wary about the company you invest in.

Consumer staples stocks: Also known as FMCG stocks, these are from companies that sell daily-use consumer goods like soap, edible oils, etc. The profit potential is strong in these companies, as consumers are likely to buy the products over and over.

Healthcare stocks: With the amount of attention being paid to the healthcare industry lately, it’s no surprise that healthcare stocks make great investments. The key here is to find stocks with a good track record.

Conclusion

The stock market is a great way to gain exposure to a wide range of stocks. You can learn about different businesses and industries and discover if they are the right stocks for you. When you’re investing in stocks, you’re essentially buying a right to receive dividends, interest, and/or capital appreciation. The best time to invest in stocks is when you’re young and healthy, since you’ll likely make more financial gain by growing old than by investing when you’re older. The stock market isn’t for the faint of heart, but it can be a great way to generate passive income.

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