Skip to main content

How to do direct Equity investment in Indian stock market.


In the Indian stock market, a person can make direct equity investment which can be a rewarding investment for him, as well as the risk of loss in direct equity investment is very high. People who maintain a balance in risk and return dealing with in direct equity investment, they are the winners. But how risk and reward can be balanced, the risk associated with direct equity investment comes with the complexity of information.

When buying a stock, the most important criteria for evaluating a company is Return On equity. How important is this parameter, a good investor does not invest without its help, millions of people in India invest in stocks, but only a few people know how to read the balance sheet. Apart from direct investment, mutual funds are such products that have been created for the common man. In direct equity, timing the market is very important, but timing market is not easy. The correct time of market is an essential trait that should be done while dealing with direct equity. Historically, investors have found the timing market very beneficial. Investors know how much timing the market can be rewarded for perfection.

Direct equity investment how profitable it can be ?

Compared to any other asset class, direct equity is more risky. Best investment skills earn maximum profit here. Direct equity is risky but it also opens doors for higher returns. But the only pre-condition is, someone should be aware of the value of the stock and the time of the market. Direct equity investment is about long-term growth. When a person buys a stock, he becomes a part owner in that company. In this way the company becomes eligible to share both the profits and loss made. Investors prefer equity as any other investment option promotes high-term growth in the form of equity. Consequently, equity beats inflation very easily in the long run.

Some rules to be follow to become a successful direct equity investor.

Pic the right company - It is important for investors to choose the right companies. This means that selecting a company that provides good growth opportunities. A company with strong business fundamentals, there are good stocks to buy for a long time.

Invest in right time and hold it long - Buying and selling stocks at the right time is most important. This is the right time when the stocks are trading at lower prices. Like most 2008-09, there is the highest time to find low-value stocks during market crash. In short, the stock market is driven by speculation. But the fundamentals in long-term companies covered the speculative forces. Therefore, only long investment horizon allows the company to take advantage of the growth. The company can not show the short-term increase. Their growth is showing more in the time period of 7 years or more. This means that if we are directly investing in equities, then we have to give assurance for a period of 7 years or more. Buying the right company shares at the right price is essential for making money in the stock market.

No matter how good the company is, if you do not buy the stock at the right price then the best results will not be received. Timing market means buying shares at undervalued price. The direct equity investment encourages investors to invest wisely, as the investment decision will be as good in equity investment, the return will be just as good.

I hope this post will be beneficial for you, if you have a dilemma in your mind then you can tell me from comment box below.

Comments

Popular posts from this blog

How may I help you ? Ask Ashish.

I f there is a great lesson that I have learned in my life that how things are better in something (some), then there is a way to ask this question ... and a lot of them. Now, questioning does not come naturally to me. All my school and college life, I seldom questioned the fear of looking like a fool for the next five minutes. But I have learned it in a difficult way - through failures, missed opportunities, and (almost) a broken heart - that one who asks a question is silly for five minutes, but he who does not ask the question remains a fool forever. Anyway, now my life revolves around answering questions. It is also important for me to ask questions and find the answer to myself, the more questions we ask ourselves, whether it is from our life or from the investment. The answer we searched for, helps us to know more about that area. I am not a person who has all the answers (nothing), but I try to answer most of the questions that I meet with full sincerity and honesty. An...

Eight golden rule, which every investor should follow before taking an investment decision in a company.

When I decide to buy stock, a common question rise in my mind, Is buying this stock is worthwhile?  Often such questions tend to tighten investors. Getting answer such questions are not less than solving a puzzle. An attentive investor must follow stock investing as if they are attempting to solve a puzzle. As an investor, if I want consistent return from the Indian equity market then I must choose fundamentally strong stock for investing. Here’s eight golden rules that investors should follow 1. Choose a fundamentally strong company for investment. To find a fundamentally strong company, we can filter out healthy companies using two-minute drill so that further investigation can be done. In a two minute drill, we assess the company's seven financial ratios and its tendency. Every investor should know about these eight financial ratio analysis. Every investor should look these points very carefully. Earning per share (EPS)- Should be growing in last five years....