This series on Stocks will go into detail about how to read an annual report, how to research industry sectors, financial ratios, preparing a due diligence checklist, and much more.
During the course of one's investing journey, one may come across their friends, relatives, colleagues, or simply hear about it in the newspaper or a website, about how profitable stock investing can be.
As on April 2021, there are 3,947 companies available for trade on BSE, the oldest stock exchange in India. Only 500 companies among these are qualified to be on the S&P BSE 500 TRI index while only 30 companies make it to the premier S&P BSE SENSEX TRI index.
Considering that there are approximately four thousands listed companies in the stock market in India, how does one go about deciding which companies to invest in? Where do we even begin? Which companies are "better" than their peer companies also listed on a stock exchange? Which parameters should we employ to judge companies and their stock? Perhaps we should also be asking ourselves — can we beat the market, benchmark indices like S&P BSE SENSEX TRI and Nifty 50 TRI, if we invest in stocks? If one isn't able to consistently beat easily investable indices after dabbling in stocks for several years, is stock investing even worth it?
We'll attempt to answer these questions in this series.