Indian Stock Market.

This article is for those who are not actively involved in stock market. It is my general view, and not stock recommendation.

Purpose of this article: To encourage more common people to enter stock market and gain financial literacy.

Common Myth:

  • Stock market is for those people who have money to invest.- one can invest from Rs 100 per month, and earn 4-5 % in a month. Even if one wants to buy a single stock of Rs 2 he can buy. sky is the limit for upper limit of investment.
  • Stock market is Gamble.– Buying something at lower price and selling at higher price is the base of stock market. It is not a gamble, it is a science and an art of economy. This is surely not get rich quick scheme. In simple sense it is lending money to industry when the industry is in distress and taking the money back with dividend when company performs well. This is a win win situation for the public and the company, when both company and the people involved in investment are true to them self.
  • Timing Stock market. There is no fool proof technique in timing the stock market. The best way to time the market is play for long run. Never go behind the market crowd. Plan your trade well before and stick to your plan. Plan for when should one exit particular stock. One should educate one self with basic terminology like PE ratio, moving average, Calculating valuation of stock etc before entering the stock market.
  • Best Suggestion: Before investing in real money one should practice with virtual money for 3-4 months and one should always trade in blue chip stocks. (Company which are fundamentally strong)

India is poised to be the growth engine of the world in coming decade. Stock market will play a major role as well as an indicator for the growth story. Thus it makes stocks a very sensible tool for investment and experimenting in India at this point of time.

please read once again

All fundamental analysis and technical analysis goes for a spin when any International bad news comes (like corono virus etc). Still worldwide investing in stocks go around studying the fundamental and technical aspect of stocks on daily basis.

In search of Multibagger, first we have to study the fundamental of any stock with respect to long term, before understanding the stock we must understand the environment of the economy. (To generate good profit we have to put many eggs in single basket, to ensure that our eggs don’t break we have to be double sure what type of basket we are using). Secondly we must have multiple baskets of eggs too, to diversify our portfolio.

Why i am bullish on Indian Economy for the coming decade, Let us review the key takeaway of Budget 2020, from macro economic point of view.

  1. Checks made to Curb abuse of Free Trade Agreement (by way of increased verification responsibility on the Importer)
  2. Checks made to prevent dumping of goods to protect domestic industry.
  3. DDT has been discontinued. Instead, recipient of dividend have to pay tax at their applicable rates.
  4. Creating a favorable environment for startups & MSMEs
    • Startups with annual turnover of up to 25 crore is permitted to deduct 100% of its profit for three continuous assessment years of seven years if overall turnover is under 25 crore. This limit is now increased to 100 crore and further eligibility period to deduct is increased to 10 years from 7 years.
    • In case of start ups, employees possessing Employee Stock option plans (ESOPs) may defer paying taxes up to five years from the time of exercise. (Till the time they leave the startup or until they sell their shares, which ever is earlier
    • Providing Credit Guarantee in providing finance to MSME
  5. Strengthened Public sector banks and depositors money in bank.
  6. A clear focus in pushing Agriculture, which is a major pillar of Indian economy
    • Govt. aims to increase farmers income by 2022.
    • Help 15 lac farmers to solarise their grid connected water pumps.
    • Kisan Rail’ and ‘Krishi Udaan’ for seamless transport of perishable farm goods.
  7. Push to Education, Financial Sector and Wellness Sector etc.

In nut shell the future growth lies in agriculture based industry and Power Industry. Agriculture is the back bone and Power sector is the soul. These both sector are at their bottom now a days, hitting 52 week lows frequently. This is where one should catch the fish, keeping long term in mind.

Some one rightly said about stock trading it is 10 percent buying 10 percent selling and 80 percent waiting. if one is ready to follow this principle then multibagger is here in front of you. ITC and Coal India Limited. If you are one who keep updating himself minute by minute then this is not your cup of tea. Investors invest in concept rather than particular company.

ITC is bullish because it is gradually moving away from tobacco. India is power hungry country and coal provides 80% of India’s power need and this is not going to fade away soon. Depending upon risk appetite of an individual one can increase their stakes in either of two.

  • As on 23.3.20 I prefer following ones.
  • Best Buy ITC at Rs 150per stock, and Coal India Ltd at 120 per stock. ( Govt. Of India, no competitor In coal, India’s energy need is still depended on coal )
  • For long term of 5 years.
  • Buy Reliance below 900.
  • For Short term to medium term
    • RVNL at Rs 11 (Govt. Railway company)

Due to covid 19, pandemic all good stocks are available at discounted price enter the market when waves settle down.

Basic guidance at nominal charge

Thank You.

One thought on “Indian Stock Market.

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