Tuesday, August 23, 2016

Steps to Invest in the Indian Stock Market

Steps to Invest in the Indian Stock Market - use stock filter to identify best stocks to buy

Historically stock market investments have rewarded investors with significant returns over long periods of time. Still, awareness about benefits of investing in stocks is poor in India. People are piqued by questions like how to invest money, how to invest in stocks, how to invest in share market, what are the best stocks to buy, so on so forth.  In order to address such question this article provides the steps to invest in the Indian stock market.

Step 1:

First and foremost is learn investing. Without sound investing knowledge people may face unnecessary pitfalls and may get disheartened early in their investing careers. Please read the book “Intelligent Investor - The Investors' Bible” by Benjamin Graham.

Please also learn value investing for FREE in the blog here.

Step 2

Using a kotak stock filter, “Kotak Securities” which appear as follows:

Using two parameters ‘market cap’ between ‘1000 to 99999 crores’ and ‘PE Ratio’ between 1 and 10, filter the stock. It should yield you about 100 stocks for further study. You must study carefully past 10 - 15 years’ profitability ratios, solvency ratios, liquidity ratios, dividend track record, etc. Please note this is an indicative list of items.
The stocks listed in  “Portfolio 2K15” is the final list of Indian Shares I have deemed fit for investing. The list is only for educational purposes. One cannot blindly invest in the scrips mentioned there - one has to calculate the intrinsic value of stocks and pay only the lowest  best stock prices below their intrinsic value.

Step 3

Open a ‘Trading’ account with a stock broker and a ‘Demat’ account with a stock depositary account (DP Account). You should link an existing bank account or open a fresh bank account with the DP Account for the automatic crediting of dividends. Your stock broker will assist you in this. I use ‘Kotak Securities’ as my stock broker. ‘Zerodha’ offers minimal charges.

Mutual Funds/ Exchange Traded Funds

One of the Steps to Invest in the Indian Stock Market is through mutual funds, and thereby get best stocks at best stock prices

If you think learning stock investing very tedious, you may invest in 'Mutual Funds' or  ‘Exchange Traded Funds (ETFs), which are a type of mutual fund which mirrors popular indices like NIFTY 50, for which you have to undergo the procedure in Step 3, but instead of buying the share of a company you choose the ETF. Goldman Sachs NIFTY BEES and Goldman Sachs Junior NIFTY BEES are what I have invested in and shown in ‘Portfolio 2K15’. The advantage of ETFs is that fund management charges are very low at about less than 0.50% per annum.
Alternatively, you may choose normal mutual funds. I find the fund management charges are high.

Suggested Further Reading:


Investments in best stocks will no doubt produce enduring wealth. There is absolutely no need for investors to be hassled by questions like how to invest moneyhow to invest in stockshow to invest in share marketwhat are the best stocks to buy, and so on. Steps to invest in the Indian stock market have been deliberated in detail above offering guidance to identify the best stock to buy at the best stock prices.

What Is the Difference Between A Stock Exchange and A Bank?

Dear Ms.Thaiyal Nayaki!
A stock exchange is an open market place where financial instruments like shares (also called stocks) and bonds are traded. In earlier days brokers used go physically to the stock exchange and used to buy and sell shares and bonds on behalf of their clients/ customers. Nowadays with the advent of internet these trades are conducted in an online format.
A bank is an organisation which which collects deposits from customers and lends to a different set of customers. Deposits are collected in various categories like savings, fixed, recurring deposits, etc. Banks pay interest to depositors and charge interest from borrowers. Banks also render allied financia; services like issuing ‘Bank Guarantees’, opening ‘Letters of Credit (LCs)’ etc., for a fee.
If you want to learn more about finance and investing, you may regularly visit my blog,Value Investing, which is updated quite frequently.
Thank you,

Please Note: This is a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.

I don't want my money to be invested in stock/ mutual funds . Where can I invest it and let it grow with absolutely no risk involved?

Dear Friend!
You seem to be extremely cautious and risk averse regarding investing. This is very good and very important principle. My Guru Warren Buffett, a master value investor, also warns repeatedly “Do Not Loose Money”. However based on his quote, “Risk Comes From Not Knowing What You Are Doing”, I ha”ve penned the article, wherein I have endevoured to show that risk does not lie in any particular instrument like share or bond nor is safety ensured by supposedly safe instruments
I am a value investor and like you and Warren Buffet is also highly risk averse. But being against risk does not mean shunning a particular class of assets or instruments but means learning and developing required knowledge to avoid risks.
I suggest you please read the book “Intelligent Investor - The Investors' Bible” and visit my blog “Value Investing” to learn safe and risk averse investing and become rich in the long term.
Thank you,

Please Note: This is a reproduction of the question I had answered on the website ‘Quora’, which I thought could be useful to the visitors to this blog site also.