Often it is heard that active investor laments the time and energy they churn in identifying trade candidates. If you need to choose adani green share price how can you be sure that it is going to yield you substantial returns? When you are choosing stocks keep the following pointers at the back of your mind.
Take stock of the market
Before you are adding a position, figure out how broader the market is moving. The reason being research suggests that 75 % of the stocks step up in the market. Then you need to check out the index moving average over a given point of time to check out the momentum of the stock. An example is if the trade frame is 2 months, then you would need to look into a 50-day moving average to outline the general direction of the stock during that period. You need to pay attention to the potential moving events that may have an impact on your trade such as earning announcements.
Identification of the sector
The moment you have an idea about the stock market, check in on sectors or industries that look promising. An approach is to track down the performance of the popular sectors over a period of time. If the trend showcases difficulty then you would want to choose a sector that reveals a bright future ahead. It also helps if you have an idea about the short-term performance view of each sector.
Screening for stocks
Once you have found the sector of your choice it is time to harp on the individual stocks. To narrow down the search you need to focus on the value characteristics. If you are interested in growth, you will check out historical or projected growth rates. On the other hand, if values interest you then the focus has to be on projected earnings.
Review of the fundamentals
With the shortlisting feature, it is the right time to get into the details. Firstly, you need to check out the investment commentaries that are available for every company. Do you think there are red flags that could have a major impact on the performance of the company as a whole? Also, check whether factors like product launch could have a major impact on the price of the company in the future. Also, the figures to check our financial ratings, company earnings and ratings which are being assigned to individual stocks. The key is not to go overboard.
To conclude when all these things are sorted out it is better to figure out the trend line of the stock. Based on the scenario you can purchase a stock or if the situation warrants then it is better to discard the stock. The moment you fall into a rhythm with the stock selection process all of these tends to become secondary. Platforms like 5paisa are there to guide you at each and every step of your stock-buying process.