Simple Guide to Investing in Indian Stock Market
The first step of course is of opening an online trading account in a prominent bank. Kotak Bank has a great three-in-one option of a savings bank account, a demat account and a stock trading account.
A demat account is a non-physical way of holding shares. Demat means dematerialized. Shares were materialized when they were held in paper form as share certificates. Selling and buying involved a lot of paperwork. Now once you have an online trading account you can sell and buy in the comfort of your home through your laptop or PC without having to do any paperwork at all.
You can link your savings account to the trading account and thus transfer money between the two accounts.
How do you select the shares to buy?
Now that is the big crux of the matter.
Markets are falling right now and even well respected Dons of the share market like SBI, Axis Bank, L&T, Siemens, Dr. Reddy’s are all falling like nine pins or to be more picturesque, meteorites.
A WORD OF CAUTION
Please stay away from day trading or intraday trading. It is a very professional and technical job and without this skill it is like jumping into the sea without knowing how to swim.
Stick to buying shares for long term investing.
A good idea is to do some research and find dividend paying companies and invest in the Large Caps. Right now all sectors are vulnerable. Today’s low will see another lower bottom tomorrow.
Some good experts suggesting good stocks for investing on television are Simi Bhaumik, Rajat Bose and Rakesh Bansal. It is better to write down the tips given and invest in small amounts. That way you will learn to see the behavior of various shares. A practical knowledge can be gained by observing the rise and fall of these personal shares.
Two other sources of investing ideas through apps are ET and FT ie The Economic Times and Financial Times. Knowledge is being thrown around like a good monsoon but most people disregard the tips given by these experts and fall headlong into investing in bad stocks.
One typical mistake is betting on penny stocks which you can buy in thousands in the hope that even a rise of a few paise will give a huge return. Sadly your capital erodes day by day in these penny stocks. Stick to the big guns and eventually you will make a fortune. Remember the greatest investors who have made fortunes have done so by holding on to good stocks for years and years. Two good examples are of Warren Buffet and our own Rakesh Jhunjhunwala.
Tomorrow is another day but I am sure it will be safe to sit on the sidelines this week and start your investing only next week.
Pssst Trade only on the NSE.
PS on 12th February, 2016, can’t resist a ”Told you so!” Global markets fell by more than 3% on Thursday. Today will be a slightly better day but sell on rise. Take your cash and run!