Complete Guide: Investing In Indian Markets

Are you looking to start investing in the Indian stock market? If so, congratulations! You will be a part of the biggest derivative market in the world! Did you know that as of August 2021, National Stock Exchange was capped at $3.4 Trillion? In this article, we’ll start by proving how to invest in share market in India for beginners by explaining the why and how of investing and then moving to some share market tips for beginners.

Money Not Invested Is Money Lost

India is one of the fastest-growing economies in the world, which means that companies listed on the Indian stock market have a solid potential to grow and generate higher profits.

Assuming you have 2 lacks INR sitting in your savings account, after 25 years, you would have almost 11 lacks INR (10,85,486 INR) calculated on a compounding interest of 7% (which is generous). 

But did you know, the average rate of profit in the traditional stock market industry is 14.7%!? Even if we reduce this to 10%, the same 2 lakh INR principle amount would still give you over 21 lakh INR(2,166,941). Almost 10 lacks INR is simply getting lost to the opportunity cost. You don’t want that.

Take that calculated risk, do some research, and use basic logic to gain capital and keep ahead of all inflation and depreciating assets. 

4 Steps To Start Investing 

1. Understand The Indian Market

It’s essential to understand the stock market dynamics before embarking on your investing journey. Go beyond stock investing for dummies. Understand the financial, economic, and political factors influencing stock prices. 

Formulate an investment plan that yields profitable returns over time. Understanding stock market basics is achievable by building an understanding of the stock markets, and mastering trading strategies. 

Successful stock investments come not only from buying the correct stocks but also from selling them at opportune times. So if you’re trying to learn how to invest in the stock market, begin with gaining knowledge about stock trading fundamentals.

2. Build A Portfolio

Designing an investment portfolio requires careful consideration of various factors, including your investment goals, risk tolerance, time horizon, and diversification. Here are some steps you can follow to create a portfolio that meets your investment objectives:

• Determine your investment goals: Chart out long-term growth, income generation, and capital preservation. You can then set specific targets for each goal, such as a target return, income level, or a particular time horizon.
• Assess your risk tolerance: Your age, financial situation, and investment experience impact your risk tolerance. You can use a risk tolerance questionnaire to help determine your risk level and identify the types of investments that may be suitable for you.
• Consider your time horizon: This can be short-term, medium-term, or long-term. Your investment time horizon will influence the types of investments you choose, as well as your asset allocation and diversification strategies.
• Create a diversified portfolio: Diversification is key to reducing investment risk. This means investing in a variety of asset classes, such as stocks, bonds, cash investments, real estate, commodities, and precious metals, across different sectors, regions (such as US markets), and market caps. Start by opening a Demat account with Angel Broking using mutual funds, exchange-traded funds (ETFs), and other investment vehicles to gain exposure to a range of assets.
• Monitor and rebalance your portfolio: Once you have created your investment portfolio, it’s important to regularly monitor and rebalance it to ensure it stays aligned with your goals, risk tolerance, and time horizon. You may need to make adjustments over time as your circumstances change or market conditions evolve.

3. Find The Right Broker

Choosing the right broker is an important decision for anyone looking to start investing. Here are some factors to look at when selecting a broker:

• Good Reputation: Check online reviews, customer feedback, and professional ratings to get a sense of the broker’s reliability and quality of service.
• Compare the fees and commissions charged: Find one that offers affordable pricing. Avoid those that impose hidden charges or have high account minimums.
• Should offer a wide range of investment products: If it offers stocks, bonds, mutual funds, ETFs, options, and other securities, prioritise that broker.
• Should offer advanced trading technology: A broker that offers advanced tools for research, mobile apps, educational resources, and trading platforms should be picked.
• Check for good customer service: Look for a broker that offers prompt and responsive customer support, including phone, email, and chat support.

Check whether the broker is registered with relevant regulatory bodies and adheres to industry standards for security and privacy. Look for a broker that offers robust security features, such as two-factor authentication, encryption, and insurance protection for your investments.

4. Conduct Your Research

Conducting your own research into stocks can help reduce risks by giving you an insight into the stock market and trends within it. 

• Fundamental Analysis takes a look at company information such as earnings, debts, and social value, which can inform an investor’s decisions on where to invest their money safely. 
• Technical Analysis looks for patterns in historical data as signals for when to buy, sell or hold stocks. This is an important step to factor in learning how to invest in share market.

Bonus Tips (for when the market plummets)

Market downturns can be a scary time, but there are some tried and true methods for riding the storm. 

• Focus on the long term. Market downturns are a normal part of investing, and it’s important to remember that markets tend to recover over time. Making decisions based on short-term fluctuations will only create panic, as market fluctuations are often unpredictable. Don’t let fear or anxiety drive your investment decisions.
• Diversify. While diversification won’t guarantee any particular return, it does decrease the risk of certain investments being completely wiped out by market volatility. Additionally, it can keep you from making rash decisions in response to temporary changes in market prices. 
• Finally, look for buying opportunities. Market downturns can present opportunities to buy high-quality investments at a discount. Consider adding to your portfolio during market dips, particularly if you have a long-term investment horizon. Look for high-quality companies or assets that are undervalued due to short-term market volatility.

With research and the right strategy, anyone can succeed in investing. Remember to focus on long-term goals, diversify your investments, and look for opportunities to buy. It’s important to take the time to understand the Indian market and build an appropriate portfolio. Starting your investment journey today will ensure that you don’t miss out on any more profit. So start your investing journey today – money not invested is money lost.