How to select a Stock to Invest in Indian Stock Market for Beginners.
Every investor wants to make profit in his investments. As a result of this, they always ensure they select the right stock that would yield consistent returns. It is one thing to want to select a good stock and another thing to be able to select stock. Hence, investors wonder how they can be able to select a stock to invest in India stock market for consistent returns.
Most investors lose money in the Indian stock market as a result of various factors in which one of them is as a result of lack of homework. Most investors do not do their homework as they are either not diligent enough or lack the required intelligence and knowledge. To select a stock to invest in India stock market for consistent returns, the following steps should be followed
- The company must have good fundamentals: Before one invests in a company’s stock, he needs to find out if the company has good fundamentals. When a company does not have good fundamentals, one need not bother to know about the company’s products or services, future, competitors etc. After it has been ascertained that the company has good fundamentals, one can move to the next step
- The products or services offered by the company must be completely understood: After one has found out if a company has good fundamentals, he needs to know and understand the goods and services offered by the company. One needs to investigate about the company, learn about its goods and services. It is very essential for a company to be one that can be understood easily and also has a direct business model.
- One needs to find out if the products or services would be used by the public in 15-20 years: one has to ensure he invests in companies with long life span. These kinds of companies possess high growth potential. The products or services offered by the company must ones that would still be needed in 20 years time. This would ensure that the company is always patronized. The more a company is patronized, the more profit is made by the company and its investors.
- Invest in companies with MOAT: Moat is a broad water-filled ditch surrounding a fortress or town. This serves as defense against any form attack. Moat serves as a form of defense to any challenge or issue tackling a company. There are some stocks that have moat round them. Examples include Colgate, Cadbury, Tata Motors etc.
- The management of the company must be efficient, effective and reliable: It is important for the management of the company to be efficient, effective and reliable as it ensures the company thrives and excels. When the management perform its duties diligently, it would be able to break boundaries and excel over their competitors. These are the kinds of companies that one should invest in as they are more likely to make profit in the end.