Buying Indian Stocks

Indian Stock market investments at this point till elections will be fetching you good returns.

New bie Information:
How to begin :
1. Decide to start with Rs 25000/- min investment in equity
2. Get a computer and internet access with one of the service provider.
3. Open a 3 in one account with HDFC bank , where you can approach any branch and provide following information details
a. Your address proof ( copy of passport )/ any other valid details.
b. PAN No. ( Banks have ways to check your details on tax sites to check your info is correct
c. Some banks will offer this for free for min deposit of Rs. 5000.

After you are done, you will receive information to get the account active . Netbanking should be enabled if you want to trade or buy your stocks on the net.

Bank is connected to another company called HDFCsec.com which acts as your broker.
visit www.hdfcsec.com or www.hdfcbank.com

There are four types of investors in the market.

1. Investing for the first time
2. Regular - Investor ( long term )
3. Day traders
4. High Networth (HNI)

Those who do not believe in equity investment can invest via Mutual funds.

Some of you can buy Mutual funds instead of directly investing your money.
Returns of Mutual funds are based on fund manager's smartness.

Typically a good fund manager will grow your money with 3-4 % more than the bank interest return in fixed deposit.
SIP ( Every month a regular buy of 100x units helps in growth for sure in horizon of 2 yrs.)

2. Buying and selling your selves

Learn to observe the movements in the markets. This can be divided into 2 categories.
a. Short term ( smallest being an hour - day trader - housewifes making smart money )
b. Delivery based ( medium to long term ) - when amount invested stays for more than 3 months.

3. Buying and selling based on advise of experts
This requires you to have min 5 lacs and give this money to portfolio manager to manage your money.
For other banks , this may be more than 20-25 lac as well.


4. Investors who will stay invested instead of panic when market fall

Following market news is very important and you need to spend time in the results and growth of companies where you are investing .
Few parameters to identify good companies

a. Founder holding b. Cash flow c. Balance sheet d. Earning per share e. Return on investment
f. Last dividend paid. g. growth in last 3 yrs h. profits before tax > than 25% .
i. whether its in top 3 position amongs competitor
j. Whether its a darling stock of market where volumes are high.

The new investor if enter this market and buy smaller companies stocks, need to understand the concept of stop loss ,else can for ever remain stuck with some unknown scripts when the market drops .


Be cautious about - FII and Big bulls - they create a hype in the market around many small and mid size scripts

Do's for investing your money in stocks..

a. Do invest n SIP mode for funds
b. Keep track , if started the investments once in the playground. Do not leave it to play on its own.
c. Do observe the news.
d. Keep reserves ( for bad times )
e. Invest in companies larger than 250 crores only.
f. Buy when lowest , sell when it has given you 20-25% returns.

Top 3 Mutual funds to invest ( equity )

a. Reliance Vision
b. Tata Mutual Fund
c. Birla Sunlife Mutual fund

Excellent companies to invest in long term are

Automobile sector -
Buy these on every time it dips and sell 15-20% of your holdings.

a. Maruti
b. M&M
c. Tata Motors,
d. Hero Honda

Automobile sector will grow 400% yearly in Indian Economy. We have more than 40-50 models being launched in each segment.

Volvo, Nissan and all other large vehicle mfg companies are increasing their presence.

Initially the capacity will exceed the demand and when the price settles down, these companies will sell more.


These companies are better off than blocking your money in infrastructure companies who have longer term outlook. You would have also seen what happens when you go by broker's sms tips and impulsive buying.

a. Cement companies will provide better returns than large infra companies.

b. Banking sector is good to invest now./


Don'ts for Buy and Sales in Stock markets :

Where you should not invest or be cautious or keep a watch on your portfolio.

Companies - its time to be cautious

a. Where there is lot of FII investments:

- There will be sudden pressure and panic sales , in case someone places large sales order
These are not strategic investors. These investors will be in Indian Markets to celebrate Christmas.

b. Where there is no asset plans - India Bulls, Geojit and other share trading listed companies which work on only commission basis. These can get a great fall in market adversities, where in other companies will stand the test of time and will survive the market falls .

c. Which show the change in stock value based smaller volumes which are generated due to chain of sms messages and broker tips.
- 10 crore based company with 1 crore profits, No dividends, 50 people team are some of these examples. To grow with the public money , initial intertia has to be overcome by these companies.

e.g. How to identify such a company - see the 1-2 yrs volume trend in the graphs.

If the scrip shows the volumes as 200-300 and sudden change to 45,000 - 50,000 and again the dip, its better to do stop loss and come out , rather regret later.

I would rather bet my money on Infosys, which will not disappear one single day and regular purchase will make more than 20% growth annually

d. Where in Promotors have decided to buy a small outfit in UK or US to grow the business. These companies will get bankrupt or get sold out in 1-2 yrs time frame.

e.g. How to find more of these companies - Typical case would be 100 cr company . 50 crores family investment or promoter stocks . Cash in hand 20-25 crores .. hence the bought out company deal is for strategic parking of excess cash, without giving back dividends to investors.

1. No taxation/ booking for adv tax plans
2.No investments in land,
3. No lookout of expansion ,
4. No addition to new products or market by the company in last 1-2 years.
5. Sluggish growth in sales - less than 5-10 %.
6. Change of finance Head in the company within last two years.

These can be some of the other indicators which can be discovered on the web from the client sites.

e. Companies where no Dividend or reinvestments have been done.

Most of the Mutual funds make tall claims --

Some tips to go with Mutual Fund Investments:

Invest in funds wherein there is an complete Indian origin such as SBI, Birla, Ing Vyasa,Reliance and Tata's etc.
These fund collect your money and invest into the companies into India.
These funds do not invest your money abroad or take this via FII route, as in case of other funds.

Other funds bring in lot more money using FII route , once it gets leveraged by 11% interests into indian Banks - these funds remove this from market and take this back to their country of origin. ( In a way these fund managers / companies suck blood of Indian Investors. )

What is your cost of acquiring the 'units' :

Be cautious on good looking prospectus and sweet talk by your banking assistants to make you buy . 2% is what they get out of every sale and you end up on 4% up front ( 2% to 2.5% is entry load and 2% is commission paid to the agent ) , which means for every Rs 100 purchase, you will procure the units worth Rs 95 on that day.

This is much more than the road side pawn broker for a monthly schemes. You must stay invested atleast 6 months, to recover this 5% lost up front.