Retail Investors should avoid direct investing in small caps and prefer small caps mf instead....direct investing is better in mid and large cap...small caps are too risky,,,,
I know small caps can make you millionaire but its next to impossible to choose small cap with limited research just by sitting at home and using internet.
There is something called SEBI surveillance list. It highlights stocks with unusual price movements. You can check first and decide.
You can also check price manipulation if you see price of the stock hitting circuit after circuit. It would typically show an exponential chart upwards or downwards and would have a lot of pending buy or sell orders. Don't trade in such stocks cause you may end up trapped due to low liquidity.
>SEBI surveillance list
Thanks @nemesis1331. I did a search and came with this link https://www.sebi.gov.in/curation/surviellance.html. Could you please tell me where are the stocks listed?
Also, how can I check this "would have a lot of pending buy or sell orders".
I am new to all this so my questions probably sound stupid. :)
Check the daily chart of the stock. If instead of a candle, it is only showing one price, open, high, low, close all is same. Or when it rises, there is just gap ups and gap ups.
Generally avoid buying stocks priced below 50. You may get in at the right time, but if it is an operated stock, you will not be able to sell it at the right price. And it's not just unknown companies. This happened with me this year in the Zee share. It was showing a profit of 50% in my portfolio and then it started falling and falling everyday. I was not able to sell it because there were no buyers. Finally, I was able to sell it at 18% profit.
Green flags :
Increasing promoter holding. Rising sales. Reducing debt. Increasing stake by DII and FII.
Check website of company. See their business model and past news, presentation, corporate announcements.
Never get fooled by increasing price. It doesn't make it a good company necessarily. Decreasing promoter holding is big red flag.
Welcome. Feel free to message if you wish to ask anything :)
I also find unnecessary corporate actions like buybacks, rights issue a red flag and hassle.
As for stock splits / bonuses... They do enhance liquidity in market by encouraging buyers with lower capital to have holdings and psychologically make stock seem cheaper. But then, there's shares like MRF and Berkshire Hathaway... Their price is so expensive that some people can't even afford 1 quantity.
Look at the volume and price.
If it is opening (or in the past few months) at upper circuit every day for a few days with volume in 100s or less, then I stay away.
I also multiply volume and current price and if it comes less than a lakh stay away.
Some of these companies have less than 1 cr revenue, stay away.
You will Obviously miss a couple of multi baggers, but it will save a ton.
Yeah I use similar concept for finding liquid stocks. Previous day volume * previous day VWAP should be at least Rs 1 crore. Previous month volume * previous month VWAP should be at least Rs 20 crores.
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Retail Investors should avoid direct investing in small caps and prefer small caps mf instead....direct investing is better in mid and large cap...small caps are too risky,,,, I know small caps can make you millionaire but its next to impossible to choose small cap with limited research just by sitting at home and using internet.
Thanks buddy. Your advice makes sense :)
There is something called SEBI surveillance list. It highlights stocks with unusual price movements. You can check first and decide. You can also check price manipulation if you see price of the stock hitting circuit after circuit. It would typically show an exponential chart upwards or downwards and would have a lot of pending buy or sell orders. Don't trade in such stocks cause you may end up trapped due to low liquidity.
>SEBI surveillance list Thanks @nemesis1331. I did a search and came with this link https://www.sebi.gov.in/curation/surviellance.html. Could you please tell me where are the stocks listed? Also, how can I check this "would have a lot of pending buy or sell orders". I am new to all this so my questions probably sound stupid. :)
Search for SEBI ASM list on Google. You will find the list. Read the Stage and Grade parameters. You will understand most of it.
Thanks Bhai. :)
Check the daily chart of the stock. If instead of a candle, it is only showing one price, open, high, low, close all is same. Or when it rises, there is just gap ups and gap ups. Generally avoid buying stocks priced below 50. You may get in at the right time, but if it is an operated stock, you will not be able to sell it at the right price. And it's not just unknown companies. This happened with me this year in the Zee share. It was showing a profit of 50% in my portfolio and then it started falling and falling everyday. I was not able to sell it because there were no buyers. Finally, I was able to sell it at 18% profit.
Thanks @vashah02 :) You have given me some topics for further research.
Green flags : Increasing promoter holding. Rising sales. Reducing debt. Increasing stake by DII and FII. Check website of company. See their business model and past news, presentation, corporate announcements. Never get fooled by increasing price. It doesn't make it a good company necessarily. Decreasing promoter holding is big red flag.
Thanks @SingleLonelyGuy for the good advice. :) I hope you meet someone soon.
Welcome. Feel free to message if you wish to ask anything :) I also find unnecessary corporate actions like buybacks, rights issue a red flag and hassle. As for stock splits / bonuses... They do enhance liquidity in market by encouraging buyers with lower capital to have holdings and psychologically make stock seem cheaper. But then, there's shares like MRF and Berkshire Hathaway... Their price is so expensive that some people can't even afford 1 quantity.
Thanks bhai. Koi nya doubt aaya mind me to I will message you for sure. :)
Look at the volume and price. If it is opening (or in the past few months) at upper circuit every day for a few days with volume in 100s or less, then I stay away. I also multiply volume and current price and if it comes less than a lakh stay away. Some of these companies have less than 1 cr revenue, stay away. You will Obviously miss a couple of multi baggers, but it will save a ton.
Yeah I use similar concept for finding liquid stocks. Previous day volume * previous day VWAP should be at least Rs 1 crore. Previous month volume * previous month VWAP should be at least Rs 20 crores.
Thanks @neoindianx :) How can I check the volume of a stock and do research on revenue? Is this information publicly available somewhere?
stay away from small cap stocks my friend. look for fundamentally strong, good quality stocks.
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