Hi,
Welcome,
This
one a compiled post bringing essence of two previous articles, publishing again
on specific demand by few clients. In short, I have explained the minimum level
of awareness we must have, before jumping for an Investment or Trading in “Equities”.
Thousands
of investors are joining with the market at this high valuation through various
channels whether Mutual funds, Stocks or any other Equity formats. Most of them
are involved in Trading, some of them planning Short / Mid Term investment with
high level of aspirations, but without clear perception. I would like to stress
on some important points which may help you out in the long run.
.
For Investors
The basic
researches which lead us to making decision or select stocks to invest,
demanding intense study which includes several factors.
Just think…did
you ever hear directly or indirectly about the Company/Stock or about their
Products/Services etc.., If you never heard… simply forget them..!
Even
if you heard, still you need to investigate about the company before putting
money on them, about their assets, liabilities, earnings, Promoters, Management,
competitors, the nature of business, sale figures, the amount of debt etc..
etc.. You can find many of these information your own with various financial
web sites including NSE/BSE sites.
If
you have done your homework in a legitimate manner and you have some patience,
you should be rewarded with unbelievable high returns. It is not much the
conventional or practical way of investing that the majority adopts. But I
believe in this system and it is proved as the best strategy in the long run.
Full or partial of the following factors
should be considered while selecting each stock for Investment.
(a) The fundamentals
(b) Sales/Profit CAGRs
(c) The product trend and applicability issues
(d) The future scope of products/Services
(e) The Management
(f) Assets/Infrastructure of the Company
(g) Certifications and Awards
(h) Market Response
(j) Previous Products/Projects Performances
(k) Investor relations
(l) Dividend History
m) Promoter’s holding
n) Product/service demand
For Traders
The
basic theory of demand and supply
is the driving force which fluctuate the share prices. The propensity to
boost in price of a share means augmented
demand whether it is for short term or in long term. The long
lasting demand of a stock depends on various factors, which we will discuss
later. But for now, what all the factors
which amplify the demand of a particular stock in short term?
Simply, something is happened or
happening behind the screen or certain positive news sparked on the company/scrip like any
of the following:-
a) Positive Mergers, Acquisitions etc..
b) Positive company results.
c) Fresh and commendable orders bagged by the
company.
d) Tie ups , collaborations with heavy players in
the industry.
e) Significant
Awards/recognitions/approvals/patents to the company or to their products.
f) Chairing of well known
professionals/intellectuals to the board key posts or as Directors.
g) New or sensitive product launches.
h) Heavy insider buying or promoter’s accumulation
from open market/Buy backs.
i) Heavy corporate Interventions/HNIs/MFs/Investor
legends/other Financial services.
j) Sometimes, bad news on major competitors, :-)
k) Increasing of assets by the company.
l) Positive media reports/Survey/research results.
m) Dividend declarations.
n) Positive technology advancements in the sector.
o) Favorable Govt decisions/rules/stands to the
industry.
p) Positive Industry growth charts/figures.
q) Baseless but temporary positive rumors.
r) Favorable court verdicts in disputes involved.
I have tried to include most of the reasons whatever I remembers right now, please suggest if I left anything.
What
basically an intelligent Intraday / short term trader have to do is, grab such positive but genuine news threads (in kind of listed above) as earliest or much
before the public get aware, and prepare the strategy.
So, whether you go for a long term investment
or for trading, you must do some homework prior… the homework done by the others,
surely better for their homes especially in trading format.
Merry X’Mas and Happy New Year.
Love
Shabu
