Tyre manufacturer MRF on Tuesday created a new milestone on Dalal Street as it became the first stock to cross the Rs 1 lakh mark. MRF shares rallied 1.37% to hit a new 52-week high of Rs 100,300 on BSE.
Earlier in May, MRF had fallen short of just Rs 66.50 to hit the Rs 100,000 mark in the spot market but had crossed the psychologically-important level in the futures market on May 8.
A high price tag, however, doesn’t make MRF the most expensive stock in India as investors value securities on metrics like price to earnings (PE) or price to book value (PE).
the factors to consider when investing in the stock market
Investing in the stock market can be a lucrative way to grow wealth over the long term, but it also comes with significant risks. Before jumping into the stock market, it’s important to consider a variety of factors to make informed decisions and protect your investment. Here are some key factors to keep in mind when investing in the stock market:
##1. Set Investment Goals
Before investing in the stock market, it’s important to set clear investment goals. Determine the amount of money you want to invest, the level of risk you’re comfortable with, and your target timeline for achieving returns. This will help you stay focused and make informed investment decisions.
##2. Understand the Basics of the Stock Market
Basic knowledge of the stock market is essential before investing in stocks. It’s essential to understand the relationship between supply and demand, company performance measures like earnings, and key financial ratios that investors use to evaluate stocks.
##3. Research the Companies You’re Interested In
Investing in stocks involves investing primarily in individual companies. It’s imperative that investors research the companies they plan to invest in. Analyzing the financial statements of the company, researching their competitors, and examining factors such as industry trends, market-size, and the regulatory environment can give you an insight into the company’s potential for growth.
##4. Evaluate the Stock’s Value
Unlike other investments, the value of a stock comes from investors’ expectation about future performance. Therefore, understanding the intrinsic value of a stock is key. It is important to examine aspects such as price-to-earnings ratios and price-to-book ratios to determine if the stock is undervalued or overvalued.
##5. Be Prepared for Volatility
The stock market is volatile, and stock prices can experience steep fluctuations over short periods. Investors should be prepared to weather these fluctuations and avoid making impulsive and emotionally driven decisions.
##6. Diversify Your Portfolio
An essential aspect of investing in the stock market is diversification. Diversifying your portfolio reduces risks by spreading your investments across different sectors, industries and asset classes.
Investing in the stock market can be an exciting and rewarding experience, but it requires a significant amount of research and due diligence. By keeping these factors in mind, investors can mitigate risks and make informed investment decisions.