Must-Have Share Market Knowledge For The Newbies In India

The biggest loss in the world of investment is not investing at all. As the investment genius, Mr. Warren Buffett, pointed out, “The stock market is no less than a mechanism that transfers money from the impatient to the patient.” This single statement sums up the significance of having patience when one is out and about in the trading landscape. Although people are gaining profit with a long-term haul and short-term fluctuations, uncertainty is one element that is constant when it comes to investment in share market.

The Indian share market doesn’t discriminate between beginners and seasoned investors; it can be pretty exciting and intimidating at the same time. Online trading and investment have opened the door to endless possibilities. Still, before one jumps to the stock market app selection, it is always recommended to be well-informed about the factors that directly or indirectly impact the market price movements.

Let’s delve further to understand how certain metrics and insights can help determine the appropriate stock for investment. There needs to be more than just research through investment blogs, browsing financial websites, and seeking expert advice to equip a newbie to combat the wild storms of the share market online. One should go the extra mile by taking into consideration the following pointers:

Determining the fundamentals of a company: It is the first step to identifying the financial standing of an organization. Only after this can we think about researching its product and services. Along with exploring the past performance of the shares of any such company, it is also crucial to have clarity on certain ratios and their trends. For example, earnings per share, debt-to-equity ratio, return on equity, etc.

Having a sound understanding of the products and services of an organization: Until and unless we are not sure about how the company executes its business, the model it incorporates, and the product it creates, investing in its share will be like shooting arrows in darkness. If there isn’t a clear idea about the core business concept of any company, how can investors dream of earning profit based on its performance in the future?

What will be the future of the company’s performance and its value of share: Look for the companies that produce sustainable products which are here to stay and not the ones whose future is questionable. Investing in the share of a company that makes toothpaste is always better than the one producing digital memory devices. The former is something that will be relevant to its consumers in the foreseeable future. For the latter, we know they keep getting updated and improved with time.

Always prefer the MOAT stocks: they are the specific stocks with a protective shield around them, and it is particularly difficult for their competitors to beat them. For example, in India, companies like Nestle and Maruti Suzuki have proved to be MOAT for quite a long time. Comprehending the USPs of the organizations is also necessary to make informed decisions to invest in shares so that we know what these companies are doing to beat their competitors.

The Term MOAT was coined by the trading tycoon Mr. Warren Buffett, and it is the acronym that specifies the existing competitive advantage possessed by the company. It stands for.

M – mode of business, O – obstacles to entry, A – assets & T – time.

With the influx of information in hand, trading platforms with the necessary tools, and creating a free demat account, investing in shares and trading stocks becomes way more exciting and satiating.


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