The Don’ts Of Investing In The Indian Share Market

By Author: Vamsi Krishna
Total Articles: 27
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The share market offers an attractive option for investors who are looking for higher returns. But one thing that you must always remember while investing in anything is that returns are correlated to risk -- higher the returns, higher the risk. This is particularly true of the Indian share market. The stock that seems headed for the stratosphere today may end up languishing in the bottom of the pile tomorrow.

So what steps do you have to take to avoid losing money in the share market in India? Here are some pitfalls you should avoid.

a. Don’t be lazy: Research the share market thoroughly. Don’t buy a stock just because someone has recommended it, or because its price has been rising. Look at the fundamentals, examine balance sheets, look at the investment climate, the company’s management, industry prospects… Lots of sites offer share market live news and commentary. Track your stocks through them.

b. Watch out for fly-by-night operators in the share market. Don’t invest in companies you don’t know anything about just because its share price has shot up in recent times.

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... c. Don’t invest in shares in industries that you don’t know much about. There are plenty of scrips in the Indian share market in `sunrise’ industries like biotechnology, information technology and so on. They may offer attractive returns, but make sure the stocks you invest in are in areas you know something about. You don’t want to be wiped out by investing in a company that has lost its technological edge!

d. Don’t try to price the share market. Have a systematic investment plan and stick to your goals as far as returns are concerned. Don’t make the mistake of panic selling when the share market crashes, and go on a buying spree when there’s a boom. The secret of making money in the stock market is keeping a cool head.

e. Don’t invest in individual stocks if you don’t have the time or inclination to do stock research. A mutual fund manager will be able to do a far better job of picking stocks than you will ever be. Remember, investing in the Indian share market requires commitment and patience.

f. Don’t look for unreasonable returns on the share markets. Keep your expectations low. The share market is not a casino, nor is a share a lottery ticket.

g. Remember that past returns are not an indication of future earnings. A stock may have made money for years in the past, but things can change. Always diversify to ensure that you get stable returns. Don’t put all your eggs in one basket.

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 live