How to know which stocks to trade in with so many companies listed?

Last Updated: 19-Feb-2022

Short Answer

One can either invest in bluechip companies or research extensively on the companies they feel would give returns. It also comes down to the type of investment they are ready to make. Hence, figuring out the different companies could take time, experience, and research.

Detailed Answer

The Indian stock market comprises more than 7000 companies, making it one of the biggest stock markets in terms of companies listed. However, with these many companies, how do you figure out which ones to invest in and where to start from? Well, to provide a brief answer to this question, let’s consider some parameters first.

Deciding factors for choosing a company

Typically, people often depend on word of mouth to invest in the stock market. Well, these tips and other pieces of information could help but shouldn’t be relied upon extensively. Hence based on the factors listed below, choose the companies.

1. Blue-chip stocks

Blue-chip stocks are those companies that are at least 50-60 years old and have made a considerable impact. No doubt their returns might be less or even stable around your investment parameters. But down the line, you should get considerable profits from your investment. These are often NIFTY50 companies listed, and you can invest in any of these companies as they have a larger market cap, and traders often trade in these segments. These companies include Reliance, SBI, TATA, HDFC, TCS, and others.

2. Dividend stocks

Suppose you hit a search parameter online on the dividend stocks on the stock market. In that case, you can invest in any company as they pay out considerable dividends based on their profit margins. Of course, these companies often trade at a higher price point, but if you have a larger amount, then these types of stocks could be profitable as you could see your investment pay off in the long run merely based on the dividends gained from them. These companies include Reliance, TCS, India bulls, etc.

3. Growth stocks

These stocks are hugely volatile, wherein they tend to gain a lot of traction in a smaller period. Moreover, these are stocks that are buzzing in the stock market and aren’t as old as the blue-chip stocks. However, they do have their upside and downsides. If any negative information falls out, it impacts their growth exponentially. Such stock includes Bajaj Finance, Muthoot Finance, and others.

From the pointers mentioned above, you might be wondering, “Which stocks to I invest on?” well, there’s no one perfect answer to that question. If you were to look online, then there are so many articles that would give you predictions. But then it all comes down to your investment amount, the type of return you’re looking and the trading parameters to consider for your investment (shorting, long term, dividends, etc.)

Which Stocks to trade in?

Always keep in mind that research extensively on the NIFTY50 and BANK NIFTY companies. Undoubtedly, these are low growth companies, but they do offer stable and exponential returns in the long term. However, check out different segments of new and upcoming companies and keep a check with the financial news to understand which companies might grow and conjoin with your investment plans.

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Categories: Stock Market
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