I would like to start this post by mentioning two of the previous post where we have covered
Gone are those days when performing fundamental analysis required extensive knowledge of financial markets and hand on number-crunching skills. There are various websites that are keeping track of company financial data and it is available in the public domain for everyone for consumption. In this post, I will touch base on certain parameters along with a few of my favorite places to go look for the relevant information.
NSE and BSE
The official website of NSE and BSE are the single most source of legitimate data for any/all companies listed on the stock exchange. I agree that the visual representation may not be very appealing though. If you find some article or post boasting promising information, it's better to validate it with official information available on NSE and BSE website which is governed by SEBI (Security and Exchange Board of India)
TickerTape
By far this has been my favorite place to look for various aspects and parameters when determining to buy a certain stock. The visual representation of the tickertape website is very catchy and can sometimes be one-stop for all the relevant information and has helped me a lot in my decision making.
Lets touch base on a few parameters to get started with.
Price Chart will show you the price performance for a certain time period. Investment Checklist provides high-level info about the stocks' intrinsic value, returns when compared to FD, Dividend returns, and any Red Flags. Financial Trend is a bar graph showing the Revenue and Profit for the last many years.
An important factor also available is the shareholding pattern. This tells you the percentage of stocks held by company promoters, mutual fund houses, domestic institutional investors, and foreign Institutional holdings along with retail investors. A higher percentage of stock holding by promoters of the company denotes their faith and trust in their own business.
A key part of promoters holding is the number of stocks pledged by the promoters. In general, promoters of the company tend to pledge some percentage of their holdings as a guarantee to Banks and financial institutions which means that in case they default of loan payments, the pledged shares can then be liquidated by the lender to recover their money. A low amount of pledging done in good faith should not be a problem but an increasing amount of pledged stocks YOY (year on year) is a red flag. Similarly reducing amount of pledged percentage YOY is a good sign which means the promoter is keen to close off the borrowing.
A good holding pattern is where promoters hold the max amount of shares followed by FII, DII, and MF houses with least holding by Retail investors.
You can also find the latest News and Events for the stock on tickertape along with analyst recommendation. Tickertape also contains financials and P&L performance of the company along with an option to compare the stock with its peers of the same sector. Some features like price forecast etc. are premium features for which you need to take tickertape pro subscription.
Moneycontrol
Another important website for you to simply search with the company name and it will show you all the juicy information about the company. For some users, moneycontrol may appear as overwhelming with an enormous amount of data but more data is always better than less. It also has up to date information on mutual funds, index funds, and ETFs and many other securities and can be a one-stop-shop for all your financial investment information.
Lets further look into some more parameters useful when evaluating a stock for buying.
The beta of a stock is a useful parameter that shows you how volatile the stock is as compared to the overall market. Beta less than 1 means stock has less movement and more than 1 means stock is more volatile. In general, higher beta means high risk with high reward and lower beta is low risk and low reward. Anything very near to 1 is ideal.
Dividend return is also a good parameter which can sometimes act as a side income. A stock with near to 2% of dividend yield per share is a good portfolio addition. There is also a catch here which needs a mention. Certain companies prefer giving a high amount of dividends to keep the investors happy but their annualized return is low. The choice is purely yours to make.
All of the above information can be found both in tickertape and moneycontrol
I am not covering complex topics such as price forecast, future value, ratios, and technical chart analysis here as they would require their own special mentions but all what I have covered above should give you a head-start in your stock market investment journey.
As a conclusion to this rollercoaster, I would like to say that the stock market is nothing but a representation of human behavior and reaction. In a market, buying and selling stocks continue all the time and you are able to buy a stock only because someone is ready to sell. You might be seeing value in buying but someone is thinking opposite hence selling. One last important note which I want to make is simply looking at the price of the stock and making the decision to buy is a wrong approach as a lower/higher price of a stock does not correctly represent its good or bad side. Avoid buying large quantities of cheap stock as they will continue to remain cheap and do not hesitate in buying higher value stocks in small numbers as they would give good return in percentage terms.
In our next post, we will cover various myths about the stock market and how you can ensure you are not falling prey to them.
(PS: The author has no tie-up or sponsorship with any of the mentioned websites and tools and all the information in the post is his personal opinion for information and learning purposes only.)