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I would like to know when you invest in stock market what are the criteria's that influence you to invest in a particular stock ? The generally accepted guideline is :
1) Dividend payout by companies
2) Promoters credibility and track record
3) Bonus Issues
4) Future prospects of Business
5) Profitability record of the company
6) Cash Reserves of the company
7) Brand Name
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The choice of stocks depend on what a person wants.
Dividend payouts are stocks picked by people who are looking to earn consistent revenue, rather than watch their principle amount grow. On the other hand, those who want their money invested to go 3-4 fold invest in stocks which have growth potential. Often, those companies are the ones which offer least dividend because they are heavily reinvesting all their money back in business.
Brand name is most important in choosing a stock. The brand name and management decides the company's goodwill in the market, the trust people have, the potential for the company to grow and others. Similar to how we trust branded stuff more than cheap imports from neighbours.
Profitability is a good index to understand how much you can get as returns from a stock. A company more profitable though with lesser business can afford to play with more funds than those with cut throat margins. The former grow faster.
Cash reserves and other aspects give us better understanding of the company's abilities to handle funds.
Yes, macro and micro policies are extremely important in deciding what the future prospects of a business are. And those are what will decide the future value of the stock price. The norm is a stock price is reflective of factors about the company for the coming 6 months.
All the best...
Good you seem to understand investing in stock markets, there are three crucial elements in Macro environs one is international and domestic concerns are interest rates and inflation. Scams emergence and rolling out of MEGA IPOs is another indicator which way the markets are heading. Election and Budgets do play some role in proping up the stock market. Never be too greedy on earning more, hit out and get out when you reach the targets.
our sebi, has failed in curbing price riggings. All new issues that took public money are trading at meager 10% of the price investors coughed out. who will take the blame. players easily manipulate prices.media jounalists keep on luring and duping investors by frivolous tips. no one rises to ask and penalise these nuts.
Pramod, SEBI is doing a great job in maintaining sanity in the market. I'm sure you know the BSE & NSE have the least delivery time in the whole world. To bring us to a T+2 situation from a time when the stock market was neck deep in red tapism is no mean feat.
We have to remember the corrupt are being protected by some authorities higher than the SEBI. The SEBI doing its best in protecting investor interest and stopping malpractices. Try reporting a malpractice to them and see how smoothly & quickly they swing into action.
The buck actually stops with the government which is protecting the corrupt because both parties are hand in glove...
I am sorry that I cannot agree with you on this vishal, I sense, sebi too involved in the imbroglio.
I have never got influenced by public issue companies, except jubilant foodworks which seems to be doing well as of now, it might come down 50% unless Dominos gears up with wider volumes and reach and economical offerings. I don t know why the investing public puts their money in doubtful companies, i have been fooled in the secondary market by two such companies one is Birla power and another Pyramid saimara, i hope to get out booking losses.
@Umesh, Pyramid Saimara has now been banned from the stock market. JFW has 0 debt, which is what makes its balance sheets very strong. Yes, it is a volatile stock, but I'm sure in the bull run, you will witness a growth like never before. I track the stock like a hawk and the patterns sort of fall in place.
Let's keep this discussion at how to pick stocks and let go of pointers which may not help. Poor corporate governance, corruption, etc. are deeply rooted in the system. There is not much we can do about it. What may make sense is making the best use of the available situation.
Corporate funding in elections in official form is good development, whatever is paid in cash is a bad precedent. Once payment of cash or unaccounted money is encouraged parties or candidates will blackmail, once it is officially paid they tend to keep quiet which calls for accounting. I hope lobbying is deployed currying favours to politicians in the form of jobs, travel reimbursements, medical treatments etc rather than paying them cash.