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This website is purely ACADEMIC in nature and NOT a stock market recommendation service or a tip provider. No live data or feeds are provided and all information is historic only. Information is provided for ease of understanding for the purpose of learning. Accuracy of definitions etc is not mantained. I am not a SEBI or IRDA registered.
Equity Investing Rules Book
Here are some of the fundamental analysis rules that help you identify / filter stocks.
- Rule #1: Do not invest blindly on tips, suggestions or calls given by others or because someone invested in the company
- Rule #2: Prefer investing in companies listed on both NSE and BSE. Avoid companies that are listed only on BSE
- Rule #4: Start your stock selection from the biggest stock in the market to the lowest stock in the market.
- Rule #5: Prefer companies that have more pros and preferably no cons (screener)
- Rule #6: Prefer consistently *profit making companies*. Look for companies that make profits (in particular operating profit, profit before tax and net profit)
- Rule #16: Check Historical Data before beginning to invest
- Rule #19: Avoid investing in a share whose CMP is close to 52-week high. Consider investing at 52-week low if the company is fundamentally good.
- Rule #20: Do a business fundamental analysis to understand the positioning and identify opportunities of the company
- Rule #21: Diversify your portfolio to a maximum of 5 to 10 stocks with a proper mix from different sectors / industries
- Rule #22: Keep regularly investing in your chosen list of shares at all times
- Rule #23: Avoid investing in more than one stock belonging to the same group of companies and subsidiaries(or promoters)
- Rule #25: Prefer stocks that are in F&O segment.
- Rule #26: Prefer shares whose CMP is below its Book Value (BV)
- Rule #27: Prefer companies with that are debt free or having meaningful liabilies
- Rule #28: Understand promoter holding of the company before investing
- Rule #30: Avoid shares of companies which touch upper circuits or lower circuits frequently and without any reason
- Rule #31: Avoid investing in T-group company shares till they are moved to its parent group
- Rule #32: Understand solvency of the company when investing in it. Prefer companies with Altman Z-Score above 2.6
- Rule #33: Prefer companies with Piotroski F-Score above 6
- Rule #34: Prefer companies with Modified C-Score less than 2
- Rule #35: Invest in a company when macro factors support the company / industry.
- Rule #37: Keep an eye on who is buying / selling shares in the Block Deals and Bulk deals
- Rule #38: Invest in companies that have good ROE and ROCE (compared to its sectoral peers)
- Rule #39: Invest in companies whose earnings growth is more than the share price difference in the past 1-year
- Rule #40: Invest in companies that are backed by good promoters and management
- Rule #41: Keep an eye on the Alpha of your portfolio to find if your pf is under-performing or over-performing to the stock market.