Most important thing to start, to invest in stock market is a Demat account. If you don’t have a demat account open one account with the broker of your choice. Add funds to it and you are all set to start investing in stock market.
Here is a list of some securities which need no technical analysis to start investing
NIFTY bees
Nifty bees is a tradable index of nifty 50, It is ETF of NIFTY. When you invest in NIFTY bees it gives you benefit of top 50 companies listed on national stock exchange. It includes all sector’s top companies and gives parallel returns of the overall market.
BANK Bees
This includes all the banks listed under Bank Nifty index, India’s top banks. It gives benefit of return of these banks cumulatively. Investing in ETF or BEES saves you from hustle of selecting stocks.
PSUBANK Bees
This includes listed public sector banks and gives benefit of returns parallel to PSU bank index.
ETF and BEES saves your time and provides better chances for risk management compare to a stock. Its return is lower in comparison of an individual stock so as risk. These are the best option to invest for new investor and investor with lower capital.
How to select a stock to invest in stock market?
As a first step, investor needs to understand the sectors of stocks listed on the exchanges. Sector is a bunch of stock listed with same nature of business. Some of the sectors are as follows
- NIFTY auto
- NIFTY psubanks
- NIFTY metal
- NIFTY privet banks
- NIFTY pharma
- NIFTY realty
- NIFTY fin services
- NIFTY FMCG
- NIFTY infra
- NIFTY media
- NIFTY consumption
- NIFTY healthcare
- NIFTY OilGas
After identifying the sectors, investors need to identify which sector is in uptrend or at reversal from the down trend. After identifying certain sectors it’s time to identify the particular stock to invest.
- Look for the companies with competitive advantage in your choice of sector. Larger the area of advantage means larger the benefits and better chances of profits compare to its competitor companies.
- Find no debt companies or companies with low debt ratio. Look for the company which has reducing debt ratio. For a company who is into reducing the debt there are more chances of increase in the profits.
- Look for a good management. Experienced and confident management can make better decisions for the company and can make it more strong and profitable in longer run.
- Identify company that pays good dividend. A dividend is something which company distributes to the shareholders from its profits. So if company is paying dividend it means company is making good profits.
- Invest in that particular stock and wait for good time to get returns.
How to handle crash or volatility and risk in share market?
Stock market is the place where risk is as high as returns. And if not managed properly risk can be more than returns too. First and most famous rule of investment is “never keep all your eggs in one basket”. Your investment portfolio should be well diverse to lower down the risk of volatility in one particular sector. The ratio of investment shall be 20-25% of the total investment fund. Other fund shall be invested gradually to average the investment and lower down the buying price If the stock price does not move according to investors prediction.
In case of unforeseen global events, geopolitical uncertainty, situations like Covid can cause a crash in stock market, which can show a big loss in your portfolio. But one needs to understand that if the fundamental aspects of your investments are right, the event of volatility shall be treated as chance to invest at lower price and shall be taken as opportunity to add more money to it. An investor should always keep some ratio of its total investment fund reserved for such situation. If one is not confident about putting more money in same instrument, he can buy and index ETF at lower price with reserve fund. This can help minimize and neutralize the loss in less period of time.