The Indian stock market – like any and every member of its brethren across the world – is a hub of commercial activity in the country. A lot of people from various social strata participate in the same with the hope of making money. Some want to do it in the shortest time possible and others use it for long-term investment. However, the problem with any investment in stock market is that there is always a fair bit of risk involved and there is a chance that one may not make the money he or she was hoping to. However, with a little prior knowledge people can at least invest in shares that are expected to yield good returns under normal circumstances.
How to Invest in Indian Share Market?
The general theory of experts regarding investing in the Indian stock markets is to go for names that have been doing well and have a brand value as such among the people who transact on a regular basis. S Naren from ICICI Prudential supports this as well. He reasons that since India is a bullish stock market, this is the right path to follow. Under normal circumstances, it can be assumed that every stock in such a market will only rise, thus making the task of picking stocks resemble a game of darts.
However, even as the general trend of positivity continues more emphasis is put on quality. In case of sectors, which have a lot of debt, and companies whose business models are not exactly the best, it is a common feature to see a rise in price of stocks only to see them plummet before a bull run starts. A good way to judge a portfolio is to come up with a combination of Price-Earnings (P/E), which should ideally be low, and Returns on Capital Employed (RoCE), which should be high.
Nemish Shah, who is one of the founders of Enam, states that it is important for a company to be able to make profits on a consistent basis failing which it has no reasons to be in circulation. At times, it could so happen that the P/E multiple might look like it is costly. However, experts say that if a company is doing well in terms of growth, then their shares should be bought.
Berger Paints have been one of the leading performers in the last five years. In the said period, their profits have compounded by 15%. In the same period, their RoCE has stayed at 24%. Together, both these factors have ensured that their stocks have compounded at 49% in the previous five years. The pattern has been similar with Havells India, which has been one of the exceptional performers as well. From this data, one can reach the conclusion that companies, which are performing in a stable manner, are the ones that will provide regular returns on investment. It is important as a shareowner in India to focus on quality and sooner rather than later, the investment will yield the desired fruits.
Top Stocks for 2015
Following are the leading shares to invest in right now:
- CRISIL
- Dr. Reddy’s Labs
- Amara Raja Batteries
- Oracle Financial Services
- Sun TV Network
- Apollo Tyres
- DB Corp
- Berger Paints
- Infosys
- Motherson Sumi
- Supreme Industries
- Havells India
- Abbott India
- VIP Industries
- Cera Sanitaryware
- Lakshmi Machine Works
- Sanofi India
- Balmer Lawrie
- Wipro
- Jagran Prakashan
On a whole, the fortunes of individual companies tend to fluctuate each and every day in the stock market. However, it is expected that these companies may provide consistent performance throughout this fiscal.
Read Also:
A Beginners Guide to Investing on the Stock Market
Why is the Indian Rupee Depreciating?
How will FMC and SEBI Merger help the Investors?
