Planning To Invest In Stocks? Know The Basics Of Selecting A Stock

Mon, 21 Feb 2022 08:51:09 +0000

The Buyt Desk

The stock market is not an unfamiliar term to many Indians irrespective of whether they invest in shares or not. Most of us encounter these words either through friends, relatives or banks and investment officers.

With our surroundings, we have gotten too accustomed to the share market, but when it comes to investing, most of us either have no knowledge about the process or have partial knowledge, which is hardly of any help.

This article covers everything you must know about investment in the stock market, such as how to pick stocks to invest in? How much to invest? Let’s bring you some points that you should look at before you choose a stock to invest in-

Know Their Business: When you invest in the stock market, you become a part of their business. In business, what matters is the performance and consistency in performance. Would you ever lend money to a person who has weak credibility? No, the same thumb rule applies to business as well. Never buy shares of the company which isn’t performing.

All you have to do to check a company’s consistency in the last few years is check its balance sheet. Check if the company is growing, sticking to its commitments, etc. Investment decisions should not be taken in haste.

Check Out Literature – It is mandatory for companies listed in the stock market to make their performance report public. This can help you understand the company’s balance sheet. Check every literature available that tells about company performance whose stock you are considering. Also, check their current projects, their expertise and upcoming projects. Analyze whether it will grow in the future or not.

Know the Strength Of the Company – Industry screening is one of the best ways to find good stock. After selecting the industry, check the stock performance you are interested in and compare its performance with competitors. Check how the company is performing, factors that give it an edge over its competitors, etc.

Evaluate Executive Leadership – If the company has effective leadership, it will foster a smooth and progressive work culture. A well-managed company enjoys a good stock price for a lasting time. Check leadership’s expertise and how they are translating it to add value to their organization. Listen to their vision to get an idea of what the company is planning to do in the future.

Here are seven points you should consider when choosing a stock

Company’s trend in earnings growth
Strength of company in comparison to its peers
Debt-to-equity ratio
Are they giving dividends
Price-earning ratio
Long-term stability and strength

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20 Must Know Keywords of Stock Market For Every Beginner

Sun, 19 Dec 2021 10:39:35 +0000

The Buyt Desk

If you are entering the stock market for investment as a fresher, you must know about various terminologies used in the industry. It will save valuable time, which you might spend googling the meaning of these terms.

There are many terminologies the stock market has, but the key ones are only a handful, which beginners must know.

What is a stock market?

The stock market is a kind of exchange platform which traders use to buy and sell stocks. It also lets companies issue stock.

The stock market serves two purposes

It helps companies get funds which they use to expand their business.
It allows investors to share the profit of companies listed on the stock market/Stock Exchange.

The stock market is a different segment in the investment market and has distinct terminologies. The industry experts discuss the market and investment strategies in these terms only.

Here are the key terminologies of the stock market

Shareholder – These are individuals, corporations or institutions who legally owns one or more than one share of stock in a private or public corporation. The shareholders have ownership of the company.

Preference Shares – These are kind of stock or shares that offers preferential rights to investors over common stock when asset distribution or earning takes place. It has different terms and conditions for allotment.

Shares or Stocks – The share gives partial ownership of a company to an investor on its earnings and assets. The value of shares fluctuates, and its movement depends on different market factors. The more stock you have, the higher ownership you will have in the company. The terms like stock, share, equity all are the same.

Primary Market – It is also called New Issue Market (NIM). It is the marketplace for selling and buying new shares directly from the company. It is done through IPO.

Secondary Market – It is the market to trade already issued securities. It involves indirect selling and purchasing of shares. Brokers work as intermediaries, and investors earn a profit on the sale of shares.

Intraday – Intraday trading is when you buy and sell shares on the same day. The objective of intraday is for earning profit by utilizing the market movement. It is not an investment.

Bonds – It is a fixed-income instrument that an organization sell to investors. It is an amount that investors lend to the firm that issued a bond for a period of time at a fixed or variable interest rate.

Bull Market – The term is to describe the share market scenario. When the market is rising, and the public feels optimistic, the share price will go up.

Bear Market – The term describes the share market going down. People are selling shares because of prevailing uncertainty.

IPO – When a private organization launches its share first time in the market for the public. The IPO stands for Initial Public Offering. Companies launch IPO to raise funds.

Portfolio – It is the group of stock an individual is holding. It is a good practice to build a portfolio. It creates a balance between risk and reward.

Dividend – When the company makes a profit and distribute the same among shareholders holding its share, that share of profit is known as a dividend.

Index – Thousands of companies are listed on the stock exchange. It is difficult for anyone to track each share performance at a time. The index is a sample of the market. It represents the whole market movement.

Sensex – It is the index of BSE. It comprises 30 large companies from BSE.

Nifty – It is the index of NSE and comprise 50 large companies.

Limit Order – The limit order means buying or selling shares at a predecided price. E.g. If the share price of L&T is Rs 4000, but you want to buy it at Rs 3500, you will limit your order. The order gets executed only at this price.

Good Till Cancellation Order (GTC) – The order for the share can be placed when an individual is willing to sell or buy it at a predecided price. In this scenario, the share order remains active till it is processed or cancelled.

Trading Volume – It is the number of shares being traded at a time. High trade volume depicts better connectivity between seller and buyer.

Face Value – Face value term is used to state the value of the stock by the company that has issued it. It remains different from the market value.

Bid – Bid is the maximum price a buyer has quotes to buy a share.

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Planning To Invest In Stocks? Know The Basics Of Selecting A Stock

20 Must Know Keywords of Stock Market For Every Beginner

What is a stock market?

Here are the key terminologies of the stock market