Top 5 Share Market Tips

As an investor, you can be enticed by the promise of big returns from share markets. To a beginner, share markets may seem like a place where you can get easy returns from investments or a place where you can make millions in a jiffy. The reality, however, is different. It is not easy to make money in share markets. Along with having patience and a long-term investment horizon, you need to have a sound understanding of the market. Your investment ideas should be in sync with your financial goals and risk appetite and you should only refer to the share market tips from a trusted financial partner.

Before your investment idea fructifies across the stock market, you must open a Demat Account and a Trading Account with a reliable stock broker . The foremost share market tip before starting your investment journey is to select the best Demat Account in India, which will provide features, like a free trading account with zero AMC .

Here is a list of the top five share market tips:

Select investment in companies with strong fundamentals:

  • The foremost share market tip simply means that you should conduct a thorough market research about a company, before investing in its shares.
  • You must look at various parameters, like market capitalisation, net income, growth in income, debt to equity ratio, price to earnings ratio and issuance of dividends, stock splits etc. to investors.
  • You must have an understanding about the various technical terms while conducting market research. Remember, the selection of the right company may well be the first step towards fulfilment of your investment objectives.

Avoid succumbing to emotional investment decisions:

  • The second share market tip is to stop taking emotional investment decisions. Share trading should be influenced by practical considerations like market movements and company reports, rather than emotional buying and selling.
  • For instance, if there is a sudden crash in the stock market, many traders panic and immediately sell-off their stocks. Rather, you should consider your overall investment objectives, listen to seasoned investors, conduct market research, and then make an informed decision.
  • Apart from panic buying and selling, you should also avoid being greedy. Before investing in shares, you should determine your entry and exit points. Once you reach the target, you must close your position. Remember, it never pays to be greedy with market expectations: that the market will become more favourable, if you wait. Rather, adhere to your determined exit point.

Know which sectors to invest:

  • Without getting overwhelmed by the overall market perception towards performances of various sectors, you should know which sectors will allow you to meet your investment objectives.
  • According to market experts, while it is easy to decide the benchmark for investment in a bullish market, this key factor is missing in a bearish market, or when the market is down. Experts suggest keeping a constant track of macroeconomic indicators and relative strength of a stock before making investment decisions.
  • Remember that the largest company in a particular sector is not always going to be a winner. Along with having a long-term investment objective, you must understand the market movements, conduct market research about the sectorial performances and exercise due diligence before investing.

Remember stocks with low prices are not always profitable:

  • As an investor, you might get tempted to invest in stocks which are low-priced. These stocks, also known as penny stocks, might appear to be profitable but they also have large associated risks.
  • The prices of these shares can be low because of the simple fact that these companies are running into losses. And investment in stocks of companies with poor performances is never going to allow you to meet your investment objectives.
  • Remember, to have an understanding of the stock markets. You should not get influenced by advertising gimmicks or unsubstantiated claims. A small-cap stock cannot get transformed suddenly into a mid-cap or large-cap stock, without a corresponding improvement in its fundamentals.

Select a trusted and reliable stock broker:

The last share market tip means that you must open a Demat Account in India with a trusted stock broker. A reputed stockbroker can allow you to trade in various stock market options through a single Demat Account. You can also get access to features like a free trading account and brokerage cash backs.

Conclusion

Thus, if you want your investment ideas to translate into successful trading in stock markets, remember to adhere to the stock market tips as mentioned above. Always zero in on a stockbroker with excellent credentials. Selecting the best Demat Account in India will provide you access to all-in-one, hassle-free trading platforms along with comprehensive market reports and analytical tools for better market understanding.

Open Demat Account at IIFL