Selecting Good Stock
Selecting Good Stock can be of two type with horizon in mind. If you are looking for a good stock for a short term you can go for technical chart and if you wish to take a good stock for long term you can go for the fundamentals.
Once you decide the horizon you can now zero in to see the chart. First we will go with the technical chart.
TECHNICAL CHART ANALYSIS
For technical chart, analysis go through the following points
- Current global market trend
- Current local market trend
- Current market PCR (Put-Call ratio)
- Current market max pain and whether it shows some direction
- Current stock PCR and Max pain
- Recent news like split/ dividend/ result to be declared / company merger demerger/court matter pending to be announced or have been announced
- 50 DMA and 100 DMA of the share price
FUNDAMENTAL CHART ANALYSIS
For fundamental analysis of the stock go through the following parameters
- Brand Value
- Monopoly of the Brand
- PEG ratio – is it below 2.5
- Debt on the company and whether it is able to repay the loan from recent profits
- Debt/ Profit ratio
- Market Capitalisation and its comparison with other player
- FII and promoter holding along with pledge if any
- NPM% (as per sector and monopoly but above 20 is better)
- ROE and ROCE (is it above 15)
- Is it in profit? What is PE value of the stock.
- Sales growth? is it uniform?
- Any other issue with management?
- Any merger/ demerger/ Subsidary issue?
- Is there a recent stock split/ bonus/ rights issue?