Think Before Investing in Stock Market

Start Investing in Smaller Amounts - 

Stock Markets are Open for Investment, but there are some key elements which you need to look at before Investing.

If you are a beginner or new to market then start Investing in a small amount, In a scenario, If you made a wrong Investment, you will be losing the limited amount of money and you will have a chance to recover the money with your future Investments.

Educate Yourself - 

Education about the Demat Account, Knowledge of the Stock you are looking to Invest is some of the basic requisites for Investing in the stock market.

After doing some number of transactions, you will get aware of the system, your demat account functionalities.

Before Investing In a Stock, Please go through all the details of the company, like, financials, Company Result, Stock performance, Balance Sheet etc. You can get more details regarding the same here.

Risk Threshold - 

Always maintain a Risk Threshold, For example - If you have Invested INR 10,000 in "Maruti Suzuki" and you see that stock has lost 10% of your money. In that scenario, you need to decide if you would like to continue with your Investment or you would like to book loss and move out of your Investment.

Consider a few things if you are looking to SELL and Stop your Losses -

1. If the market has fallen and you expect markets to recover then obviously your stock will also recover with the market. You can avoid selling your stocks.
2. If your time horizon is Long and the company you have Invested is a fundamentally strong company then you can maintain holding your Investments.
3. If you expect stocks to perform better, then you can even Invest more at a fallen price and bring down the average purchase price.

Cut losses Immediately - 

1. If your stock is falling irrespective of any negative news flow or against the market trend then you need to sell your stocks as it may still continue to fall. This is only a precautionary measure.

How to Guide Yourself - 

Please look into the following points before looking to Invest in a Stock.

1. Company Fundamentals.
2. Company Recent Performance.
3. Financials.
4. Promoters Shareholding Pattern.
5. Charts.
6. News and Recent Orders.
7. Rating Agency Views.

You can get a detailed explanation of the same over here.

Diversify Investment - 

It is observed that any regulatory or policy change which impacts a particular sector leads to affect the share price of the companies in positive or could be a negative way. For Example - If all your Investments are in the Rubber sector and the Government announces an additional duty on the rubber then the prices of the Rubber Stocks will start falling.

To counter such scenarios, You need to split your Investments into different companies in different sectors. This will help you limit your losses due to any policy changes.

Time Horizon For Investment - 

You also need to decide on the time horizon you are looking to Invest. Purchase a stock which will rise in the time frame decided by you, although you cannot be sure of this but do your analysis before Investing.

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