Know The Market (Session-6)

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Buying your first stock-

  • You have a clear idea what you buy.
  • create a strategy for buying and selling stocks.
  • How much you are willing to take risk from other one.
  • Research properly before you put your money in particular stock.
  • Buy and hold leads to buy and forget strategy.
  • You have the discipline and confidence to get out of the market at the right time and then re-enter in an appropriate time.
Stock Selection Process-
Step - 1: Screening for ideas-

  • With approximately 7000 companies trading in BSE and NSE, analysis of all the companies may not be possible.
  • In order to avoid this as investor has to understand the kind of stocks which he wants to invest in market.
  • Example : An investor might want to invest in-
                1.Only banking sector stocks
                2. Only multi baggers
                3. Only stocks with strong government backing etc.
  • Understanding the idea behind investing makes the stock list manageable.
Step - 2: Filtering the names-
  • The next step would be filtering the names of stocks that fall in the category chosen.
  • The filtering of the stocks can be based on the easy availability of information regarding the company, management etc.
  • Filtering of stocks helps an investor to analyze and understand the stock better before making an investment.
Step - 3: Analyzing companies-
There are two major types of analyzing-
    1. Fundamental Analyzing
    2. Technical Analyzing
  • It refers to the analyzing a company based on previous financial performance, the business model in which the company operates etc.
  • Comparing the company's performance with its peers and the industry.
  • Estimating the company's value by comparing its ratios with those of the industry.
Step - 4 Investing-

After the analysis of various companies and deciding upon the stock, an investment decision is taken based on:
    a. What is the amount to be invested
    b. What is the price at which a position has to be taken.
    c. What is time timeframe of investment etc.
 
Example :
Mr. Sp decides to invest in company SpLearn ltd.
    a. With investment amount of Rs-50000/-
    b. At a price of Rs-200/ share
    c. For a period of 3 months
Step 5 : Selling the stock-
  • The crucial stage of an investment process is arriving at the right price for existing a stock.
  • The exit option due to the raise the share price
            a. To book profits due to the raise the share price.
            b. To minimize the loss due to sudden decrease in the share price.
  • A product exit price can be arrived at by analyzing the historic P/E and EPS.

---Thank You---

1. Know The Market- Session-1
2. Know The Market- Session-2
3. Know The Market- Session-3
4. Know The Market- Session-4
5. Know The Market- Session-5
6. Know The Market- Session-6
7. Know The Market- Session-7
8. Know The Market- Session-8



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