Two approaches to investing in Stock Market
CA. Pradip Kumar Ghosh
Now I mainly work as a SEBI registered Research Analyst (Reg. No. INH000016515.) In the past, in the corporate I worked at Arcelor Mittal (Europe), ICICI and KK Birla Group. Post corporate was an MBA faculty also.
There are basically two approaches to investing in the stock market, play by Index and Index related passive ETF and play by individual stocks, known as "stock picks". When you play by index you are looking at a moderate and somewhat stable return, unless you are operating in the options market. When you go for stock picks, you have to go for research on individual stock, and figure out which stocks are giving extra-ordinary return compared to the sector index to which they belong. The data from immediately ending month of June 2024 is a case in point.
Please look at the following table.
During June 2024, many sectors have performed well, giving a return above 5% in most cases. Some sectors, for example Metal and Pharma have not performed so well. Here is the return from the best performing sectors as a whole and individual stocks outperforming the sector index by a large margin.
However, individual stock picking is not so easy, because there will be intra-month ups and downs working as a fear factor. Some stocks are highly volatile, and some stocks are not. And there are sector rotations in the market initiated by big players. So the sector that performed well in one month, may not work well in the next month. If you plan any investment in the month of July 2024, based on the performance of June 24, you would be probably make a mistake, because in the new month there could be new out- performing sectors and new out-performing stock.
领英推荐
This is where the service of a Research Analyst like me comes in. Please visit www.pradipkumarghosh.com to know the service I provide.
Statutory Disclaimer : Registration granted by SEBI, membership of BASL (in the case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.