In stock market there are 7,000+ companies is listed in BSE & NSE. That's way analysis of each company is not important. Create your circle of competence. Circle of competence means, which stock u wanted to invest & do analysis of that particular stock only. Below 7 key parameters help u to do analysis of that stock :
1. Long Term Chart pattern of Company (Uptrend Chart Pattern Required)
First parameter is, check the long term term chart pattern of that company.
Search the company share price in google which u wanted to invest & click on Max . In long term chart pattern uptrend pattern is most required.
e.g. If I wanted to invest in reliance industries then I search , reliance industries share price on google & click on Max (long term chart) pattern of company. In below image u got idea how to find,
U see reliance Industries chart pattern above, chart pattern is Uptrend.
2. Promotors Holding (50)*
Promotors who know more about that company's Plans & policy's, which u are invested:
In NSE website or Moneycontrol app u find the promotors holding of that company, It's not mandatory for 50% promotors holding. If its more than or equals to 50% holding of promotors its minimizing our investment risk. If the promotors holding is 0%, that cannot indicates that company is not good. In stock market there is lot's of good companies with 0% promotors holding.
Search the company name on NSE official website then go company information & click on shareholding pattern.
3. Pledge of promotors share (20% is manageable)
In pledging of share, promotors get loan from bank by giving there company share's to the bank as a security deposit. In pledging of promotors holding 20% pledge is manageable. If the promotors pledging is more than 20% that increase our investment risk..
4. Heavy Debt(loan) on the company
Before investing in any stock u check Debt on the company. Because most companies have heavy debt, because of heavy debt company profit is decreasing. U think now how the debt affect company profit ? I tell u, if company taken any loan from the bank that's time, company required to paid the interest on there loan, then company paid the loan installment from there profit. Ultimately profit are decreasing because of debt. I want to tell u again heavy debt on the company is harmful & if the debt is manageable then its ok, because most of company's required loan for expansion of there business.
Successful Investor Vs Unsuccessful Investor
5. Check Mutual Fund, FII & Insurance Company's holding
Check the Mutual fund, FII, Insurance Company holding because the fund manager have more knowledge & experience in stock market. Mutual fund holding in company, minimizing our risk of investment.
6. Check Information about company (what services or Goods they provide
Check company official website for get information about what services or products they provide. In company website u check what was the vision of the company or the plans for the future. Because company vision decide how much they grow in future. In Wikipedia u found all information of the company like when the company is start?, who are the founders?, u also gets the official website on that.
7. Management Analysis of the company
These was the most important parameters before investing in any stock, because management conduct all the activities of the company. Because of low efficiency of management many company are fails to survive in the stock market & that company destroyed investors money. There is lost of company in the stock market that destroyed investors money e.g. Yes bank, DHFL, PMC bank, Reliance communication, etc.
Management give the vision to the company, they prepare the plans & polices for the company to grow in future. That's way management analysis is most important.
After reading that point u think, how I do management analysis?
1. Watch the interview of that management. 2. Read annual reports of the company. 3. Track previous record of that company.
