To select shares for long term investment in India first research about the company, founders, founding date, beginning price, last 5 years price chart, today’s price, upcoming price target, collaborations and then read charts.
It is always said by experts before investing in any stock research about a company and its price target but they don’t tell what to research exactly.
What to research about the company is explained to the point briefly along with chart reading basic knowledge.
How to select shares for long term investment in India
A person must know about stock market basics and investment types before making any types of portfolio so it is advised to first study about stock market then invest. To select stocks for long term investment in stock market some important points are given below in brief.
Research about company
Before investing in any company’s shares it is necessary to research about the company and also check whether it is registered in the stock market or not.
Nifty 50 index
It is good to check stocks listing in the nifty 50 index. Nifty 50 keeps top 50 best performing shares and kicks out worst performing shares continuously.
It becomes easy when you pick shares from the Nifty 50 index. Nifty 50 keeps rotating the ranking of top 50 shares. The company needs to perform continuously to maintain their ranking under nifty 50. Top 50 shares are selected and rank according to their current performance the ranking keeps getting ups and down as per company performance.
The companies that do not perform or fail to meet the target continuously get out from the nifty 50 and other companies get the chance to enter in the nifty 50 index.
So it is the easiest way to pick the best shares because the Nifty 50 index is already doing a good research work for you. There are medium cap, large cap and small cap shares in nifty 50 index you can pick them according to your budget and investment plan.
More importantly it does not mean if a share is out of the nifty 50 index cannot make good profit or cannot enter in nifty 50. With time and continuous performance stocks can get selected in the nifty 50 or perform better than nifty 50 index shares. So trust nifty 50 but not blindly and also follow some other research work which has been given here and select the share wisely.
Research about Founders
Research about founders and their chain. If a company has multiple founders then track whether founders had taken previous and current decisions through mutual consent or not. Founder’s name should be cleaned and not involved in any big dispute.
Whether the company founder who established the company is the same or other person. If the previous founder sold out the company to another person then try to find out the reason behind the company selling. Check the founders history, interest and investment in other companies.
Founding date and beginning price
Company founding date becomes necessary to identify the stock price growth. If a company was established in 1998 having the share price around Rs 10 and in 2024 share price is still around Rs 18 to Rs 20. Then try to identify the reason why the share price has not grown in 26 years. The price indicates that the company’s performance and product and services demand did not grow with the time so it is good to avoid these types of stocks.
Founding date price is good to come out of the penny stock track because people blindly pick the stocks with low prices without researching about the company,founding date and reason why the stock price did not grow.
Sometimes companies also split their shares intentionally to break the price so it is necessary to research this point as well.
Last 5 years price chart
Always check the last 5 year price chart of the company to give you a better idea about the growth of the company. It gives the idea about the consistency of the company whether the stocks are consistently grown or they grow suddenly by any news for announcement for some time. It is always good to check the 5 years price chart before investing in any stock for long term investment.
Upcoming price target
Not only the last 5 years’ price also check the upcoming price target of the company.
Today’s price
Check today’s price and analyse it with a few months’ price as well as the last 5 years’ price. Especially the last 2 to 5 years, price analysis gives you a better idea of whether to invest in a particular stock or not.
Projects and collaborations
For healthy research it is good to identify the company project and collaborations. find out the upcoming projects whether they are connected with any growth or not. Check whether the company has completed their past projects on time and look out the profit and loss by doing those projects.
Find out the company’s past, present and upcoming collaborations. Research about the companies supporting or collaborating with the company who stocks you are buying.
Read the chart
It looks difficult to read the chart but it is not that difficult. Person not having a commerce or maths background can also easily read the chart. Some small cylinders type symbols are shown on the chart. Cylinders show the down trend and up trend of the company.
Conclusion – You learned about stock selection strategy for long term investment. After going through all the necessary points given here one can improve the research. A basic research overview is explained in brief.