The Dos Of Investing In The Indian Share Market

By Author: Vamsi Krishna
Total Articles: 27
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For investors, the share market offers attractive returns both in the short and long term. Studies have shown that over the longer period, nothing beats the share market in terms of returns. However, investing in the Indian share market comes with its share of risk, and if you’re not careful, you could end up burning your fingers. But it is definitely worthwhile for the prudent investor to invest in the share market.

The first thing you obviously need to do to invest in the share market in India is to get a demat account, and then an online trading account if you want to do the trading yourself. Most broking companies and large mutual fund companies offer online trading facilities, so that you can take part in the share market, live!

Step No. 2 is doing the research. There are plenty of things you should be looking out for while investing in the share market in India. One is of course the fundamentals like the company’s balance sheet, how the industry it is in is doing, what the prospects are and so forth. Stick to the large, well-known companies if you don’t have much of an appetite for risk. ...
... The small and medium cap stocks can offer higher returns, but you need to put in much more effort into researching them. Don’t buy a stock just because you got a hot tip from your next-door neighbour.

Study the research reports available at various investment web sites, the past history of the stock you’re interested in. Look at the business papers for news of developments related to the share markets, like changes in policy that could affect the fortunes of your stock, happenings in the overseas markets and so on.

This is for the long term. There’s another game that investors with an appetite for risk love, and that’s called day trading. Here, the emphasis is not so much fundamentals as the daily price movements on the share market, and your ability to predict them.

For this you need what is called technical analysis, and make your sell/ buy decisions in the Indian share market based on that. This involves risk because there’s no certainty about the movement of stock prices on an everyday basis. They may go up when you expect them to come down, and vice versa.

Online trading platforms have a stop loss option that enables you reduce the amount of risk you’re exposed to. So you can use that option to stop hemorrhaging cash when your bets go awry.

So there are basically two approaches to investing in the Indian share market. One is to put your money in the long-term and invest according to a company’s fundamentals. The second is to do short-term trading and cash in on price movements over a shorter horizon. Your chances of making money are generally higher if you invest for the long term, especially if you’re not particularly proficient in short-term trading.

Author Bio :

Ritish Kumar is a finance enthusiast and a keen observer of the Indian share market. In this series of articles, he talks about investing in stock market and staying profitable. share market in India, share market