How to start investing in stocks in India
Purpose of Investing
One should be clear in terms of his or her goal for investing. Stock market investing as they say is subjected to market risks and therefore may not be suitable for all. There are safer investment tools like Debt funds, FD, MF, etc however the returns are not very lucrative. rather sometimes it's lesser than the inflation rate. Whereas stock investment if done right can give much higher returns. In order to have a balanced approach, it's advised that you invest 25% of your Capital in safe instruments e.g. FD, MF, ETF, 25% in Gold or gold ETFs, 30% in Bluechip Stocks, and 20% in Midcap Stocks.
When to Book Profit and Exit
while it's a debatable topic as few say that the longer you are invested the higher returns you get but the fact is the market is cyclical in nature. it doesn't keep going in one direction, it corrects due to various reasons. sometimes markets crash due to geopolitical situations or economic woes or big scams. hence it's better to have a tool or process to book part profits and trail your stop loss so that in case of a negative event, you don't lose your gains. technically speaking if the market has broken its 200 DMA on the daily chart it is time to exit the stock completely and wait for a reversal for re-entry.
In the above chart, you can see when the price closed below 200 DMA it started making lower lows. We can add 50 DMA for partial profit booking. Re-entry can be done when the price closes above 200 DMA. As long as the 50 DMA is above 200DMA we can safely assume that the stock is in an uptrend.
How to choose a Stock Broker
This is a common question of a new entrant to the stock market. Let's keep it simple, Firstly choose a listed broker with an exchange, avoid Dabba or unregulated Brokers. Now as we know that regulated brokers are under SEBI you really do not have to worry about your investments. Secondly, all the stocks in your Demat account are held with CDSL, hence even if the broker wants it cannot do anything to your holding unless you authorize them.
Now it all comes down to ease of use, charges, the information provided, Mobile App, execution speed, and software. As per my experience, Upstox meets and exceeds all the criteria and has good support service as well. You can open an online account within 15 minutes.
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