Narayana Hrudayalaya’s stock witnessed a significant movement last week, recording the highest volume in 8 years. Such high volume levels were last seen in 2016.
Mutual Fund Holding
Price Action & Volume Analysis:
The candle formed last week had a record-breaking volume, but a large wick was observed at the top. This suggests that the price was rising, but aggressive selling by sellers put pressure on buyers.
Chart
A similar situation occurred in 2016, which was followed by a major correction. If history repeats itself, short-term selling pressure could be expected.
This serves as a reminder that analyzing historical data on charts is crucial to understanding how similar price actions have played out in the past.
Fundamental Performance:
The company has been consistently growing its revenue while effectively controlling its expenses.
Despite inflation, the company has managed to keep its expenses in check, which is a strong indicator of efficient cost management.
In March 2013, the company’s operating margin was just 8%, which has now increased to 23% as of March 2024, reflecting improved efficiency and profitability.
The company is investing in capital expenditure (capex), which is a positive sign for business expansion and future growth.
Expansion
Payment Cycle:
The company has improved its Days Sales Outstanding (DSO) –
In March 2013, cash collection took 40 days, which has now reduced to 31 days.
Ratios
On the other hand, Days Payable Outstanding (DPO) has increased from 121 days to 205 days, meaning the company is able to delay payments to suppliers, showcasing better working capital management.
Shareholding Pattern & Float:
Public holding stands at 17.39%, with 1,77,792 shareholders, making it a high-float stock. A high float means the stock has good liquidity, but the downside is that price movements can be slow or unpredictable due to actions by large players.
Shareholding Pattern
Conclusion:
Fundamentally, the company is performing strongly. However, from a technical perspective, last week’s price action and volume, when compared to historical data, could serve as a warning sign. If price behavior similar to 2016 repeats, there could be short-term downside risk. In such cases, it would be wise to analyze both historical price action and fundamentals before making a decision.
Godrej Consumer Products has a market cap of ₹1,06,393 crore, but its financials do not look particularly strong. If we analyze its valuation, the EPS is -₹4.43, yet the P/E ratio has surged to 61.7, significantly higher than the industry average of 32.7. This suggests that investors are putting money into the stock based on future expectations rather than strong financial performance. Additionally, the company’s operating margin has remained stable without any significant improvement.
Profit & Loss
Stock Price Growth vs. Financial Performance
While the stock has shown strong CAGR growth, its sales growth, profit growth, and ROE (Return on Equity) are not as impressive. If stock prices continue to rise without corresponding growth in sales and profits, it indicates that the valuation is not justified—potentially signaling overvaluation.
Rising Debt and Capital Expenditure – A Concern?
The company’s borrowing has increased significantly, which could be a red flag. Borrowings increased from ₹1,130 crore in March 2023 to ₹3,222 crore in March 2024.
The company is also making capital expenditures, which could drive future growth, but if returns do not materialize, financial pressure may increase.
Declining Promoter Holding – A Warning Sign?
Another major concern is the reduction in promoter holding.
Promoter holding dropped from 63% in September 2024 to 53.04% in December 2024—a 10% sell-off.
FII holdings have also decreased by 2%, while the public has been aggressively buying the stock.
Shareholding Pattern
Promoter Selling – A Negative Signal?
When a company’s promoters sell a significant stake, it is often considered a negative signal, as they have the best insight into the company’s real position. While many promoters are increasing their stakes in other companies, Godrej Consumer’s promoters have offloaded a significant portion, raising caution.
Conclusion – Should Retail Investors Be Careful?
High P/E with weak financials – The stock is expensive, but the company’s actual performance does not justify it.
Rising debt – If growth does not materialize, financial pressure will increase.
Promoter selling – A significant reduction in promoter holding is a red flag.
FII reducing stakes – Large investors are also cautious about the stock.
Retail investors should avoid rushing into this stock and closely monitor the company’s future performance. Factors like promoter selling, rising debt, and overvaluation must be carefully considered before making an investment decision.
In a groundbreaking move towards sustainable energy, Sembcorp, a leading energy company, has recently inked a significant deal with Japanese firms to export green ammonia from India. This collaboration marks a pivotal moment in the global effort to transition towards environmentally friendly energy sources.
In a world grappling with climate change, the collaboration between Sembcorp and Japanese firms to export green ammonia from India stands out as a beacon of hope. This article delves into the various aspects of this transformative deal, exploring the significance of green ammonia, the strategic moves by Sembcorp, and the potential impact on the Indian market.
Understanding Green Ammonia
Green ammonia, produced through a sustainable and eco-friendly process, has gained prominence as a key player in the quest for cleaner energy alternatives. Its production involves the utilization of renewable resources and cutting-edge technologies, resulting in a product with minimal environmental impact. As the world increasingly recognizes the urgent need for sustainable energy solutions, green ammonia has emerged as a frontrunner in the race towards a greener future.
Sembcorp’s Strategic Move
Sembcorp’s involvement in the export of green ammonia signifies a strategic and forward-thinking approach to the energy landscape. Collaborating with Japanese firms brings together expertise from two leading nations in the field, ensuring a synergistic partnership that can drive innovation and sustainable practices. The deal emphasizes Sembcorp’s commitment to playing a crucial role in the global effort to combat climate change.
Green Ammonia’s Impact on the Indian Market
India, with its ambitious sustainable energy goals, stands to benefit significantly from the export of green ammonia. This environmentally friendly fuel not only aligns with India’s commitment to reducing carbon emissions but also opens up new economic avenues for the region. The partnership between Sembcorp and Japanese firms is set to contribute to India’s position as a key player in the green energy market.
Challenges and Solutions
While the prospect of exporting green ammonia holds immense promise, it is not without its challenges. Potential obstacles in the export process, ranging from logistical issues to regulatory complexities, need to be addressed. Sembcorp’s proactive approach in strategizing solutions to potential challenges showcases its commitment to overcoming hurdles and ensuring the success of the green ammonia initiative.
Quick Review:
1. What is the significance of the deal between Sembcorp and Japanese firms for exporting green ammonia from India?
This deal signifies a major step towards sustainable energy solutions, showcasing a collaborative effort to promote environmentally friendly practices in the global energy sector.
2. How does green ammonia differ from traditional ammonia in terms of production and environmental impact?
Green ammonia is produced through sustainable methods, utilizing renewable resources and advanced technologies, resulting in a product with minimal environmental impact compared to traditional ammonia production methods.
The risk-reward ratio is a concept used in investing and trading to assess the potential profitability of a trade or investment relative to the associated risk. It quantifies the relationship between the amount of risk taken and the potential reward or profit that can be achieved.
Here’s what you need to know about the risk-reward ratio:
1. Definition:
The risk-reward ratio compares the amount of potential loss (risk) to the potential gain (reward) of a particular investment or trade. It helps investors and traders evaluate whether the potential return justifies the level of risk they are assuming.
2. Calculation:
The risk-reward ratio is calculated by dividing the expected reward or profit by the expected risk or potential loss. It is typically expressed as a ratio or a fraction. For example, a risk-reward ratio of 1:2 means that for every unit of risk, there is an expectation of gaining two units of reward.
3. Risk Assessment:
The risk component of the ratio refers to the potential loss or downside associated with the investment or trade. It is important to assess and quantify the potential risk based on factors such as market volatility, historical price movements, and the specific characteristics of the investment.
4. Reward Assessment:
The reward component of the ratio represents the potential profit or upside that can be achieved. This is determined by factors such as the target price, profit targets, market conditions, and the potential for price appreciation or income generation.
5. Interpreting the Ratio:
A higher risk-reward ratio implies that the potential reward is greater relative to the risk undertaken, indicating a more favorable opportunity. On the other hand, a lower risk-reward ratio suggests that the potential reward is relatively smaller compared to the risk, indicating a less attractive opportunity.
6. Risk Management:
The risk-reward ratio plays a crucial role in risk management. By considering the potential risks and rewards of a trade or investment, investors can make informed decisions and set appropriate stop-loss levels or exit strategies to limit potential losses and protect capital.
7. Individual Preferences:
The appropriate risk-reward ratio varies based on an individual’s risk tolerance, investment goals, and trading strategy. Some investors may be willing to take on higher risk for the potential of higher rewards, while others may prioritize capital preservation and prefer lower risk-reward ratios.
Importance Risk-Reward Ration:
1. Decision-making Tool:
The risk-reward ratio provides a framework for evaluating and comparing investment opportunities. It helps investors and traders assess the potential benefits relative to the risks involved in a particular trade or investment. By considering the risk-reward ratio, individuals can make more informed decisions based on the potential payoff and the level of risk they are willing to assume.
2. Risk Management:
Effective risk management is crucial for long-term success in investing. The risk-reward ratio helps investors determine their risk tolerance and set appropriate risk management strategies. By maintaining a positive risk-reward ratio, individuals can aim to limit potential losses while seeking opportunities with favorable risk-reward profiles.
3. Risk and Reward Balance:
The risk-reward ratio emphasizes the importance of balancing risk and reward. It encourages investors to seek opportunities where the potential reward justifies the assumed risk. This balance is essential for achieving sustainable and consistent returns while managing downside risk.
4. Psychological Discipline:
The risk-reward ratio plays a crucial role in maintaining psychological discipline in investing. By considering the potential risks and rewards, individuals can avoid chasing excessive profits without proper risk assessment. It helps anchor decision-making on rational analysis rather than emotional impulses, reducing the likelihood of making impulsive and detrimental investment choices.
It is important to note that the risk-reward ratio is just one tool among many used in investment analysis. Other factors, such as fundamental analysis, market conditions, and investor objectives, should also be considered when making investment decisions. The risk-reward ratio serves as a useful guideline to assess the potential benefits and risks associated with an investment or trade, helping investors make more informed and balanced decisions.
Fundamental analysis is a method used to evaluate the intrinsic value of a financial asset, such as a stock, bond, or commodity. It involves analyzing various qualitative and quantitative factors to assess the financial health, performance, and future prospects of a company or asset. The goal of fundamental analysis is to determine whether an asset is overvalued, undervalued, or fairly valued in the market.
Fundamental analysis involves studying a company’s financial statements, such as its balance sheet, income statement, and cash flow statement, to understand its revenue, expenses, profitability, and cash flow. It also considers other relevant factors, such as the company’s industry dynamics, competitive position, management team, and macroeconomic trends.
Key elements of fundamental analysis include:
1. Financial Ratios:
Analysts use financial ratios, such as price-to-earnings (P/E) ratio, price-to-sales (P/S) ratio, return on equity (ROE), and debt-to-equity ratio, to assess a company’s financial performance, profitability, and leverage.
2. Revenue and Earnings Growth:
Analysts evaluate a company’s historical and projected revenue and earnings growth rates to gauge its growth potential and future profitability.
3. Competitive Advantage:
Fundamental analysis examines a company’s competitive position, its market share, and the strength of its products or services compared to competitors. This analysis helps determine whether the company has a sustainable competitive advantage that can lead to long-term success.
4. Industry and Market Analysis:
Understanding the dynamics and trends of the industry in which a company operates is crucial. Factors such as market size, competitive landscape, regulatory environment, and technological advancements can impact a company’s prospects and profitability.
5. Management Evaluation:
The management team plays a vital role in a company’s success. Analysts assess the track record, experience, and strategic decisions made by the management team to evaluate their ability to drive growth and create shareholder value.
6. Macroeconomic Factors:
Fundamental analysis takes into account broader macroeconomic factors, such as interest rates, inflation, GDP growth, and government policies, as they can influence the overall business environment and impact a company’s performance.
By conducting thorough fundamental analysis, investors aim to make informed investment decisions. They assess whether a company’s current stock price accurately reflects its intrinsic value, identifying opportunities for potential undervalued investments or identifying overvalued assets that may be ripe for selling or shorting.
Fundamental analysis is widely used by investors, portfolio managers, and financial analysts to assess the fundamental strengths and weaknesses of companies and assets, enabling them to make informed investment choices based on the company’s underlying fundamentals.
In India, there are two primary stock exchanges: The Bombay Stock Exchange (BSE) and The National Stock Exchange (NSE). Both exchanges play a critical role in the country’s securities market and offer investors the opportunity to trade a wide range of securities, including stocks, bonds, and derivatives. However, there are also a number of other smaller exchanges operating in India, which cater to specific segments of the market. In this article, we will discuss the different types of stock exchanges in India.
1. Bombay Stock Exchange (BSE)
The Bombay Stock Exchange (BSE) is the oldest stock exchange in Asia, established in 1875. It is also one of the largest exchanges in India, with over 5,000 listed companies. The BSE is based in Mumbai and operates under the Securities and Exchange Board of India (SEBI) regulations. It offers a wide range of securities, including stocks, bonds, and derivatives.
2. National Stock Exchange (NSE)
The National Stock Exchange (NSE) is the largest stock exchange in India, established in 1992. It is based in Mumbai and operates under SEBI regulations. The NSE offers a range of securities, including stocks, bonds, derivatives, and exchange-traded funds (ETFs). The exchange has a market capitalization of over $2 trillion and is home to some of the biggest companies in India. Companies listed in NSE.
3. Regional Stock Exchanges
In addition to the BSE and NSE, there are a number of smaller regional stock exchanges operating in India. These exchanges cater to specific regions or industries, and generally offer a narrower range of securities than the larger exchanges. Some of the regional exchanges in India includes the list below:
The Calcutta Stock Exchange (CSE): CSE was established in 1908 and is located in Kolkata. It was the first stock exchange in India to be recognized by the Indian Government under the Securities Contracts (Regulation) Act, 1956. The CSE has over 400 listed companies, including some of the oldest and most reputed companies in India.
The Madras Stock Exchange (MSE): MSE was established in 1937 and is located in Chennai. It was the first stock exchange in India to introduce an electronic trading system in 1997. The MSE has over 1,000 listed companies, primarily from the southern states of India.
The Hyderabad Stock Exchange (HSE): HSE was established in 1940 and is located in Hyderabad. It was the first stock exchange in India to introduce an online trading system in 1997. The HSE has over 600 listed companies, primarily from the state of Telangana.
The Ahmedabad Stock Exchange (ASE): ASE was established in 1894 and is located in Ahmedabad. It was the first stock exchange in India to introduce a screen-based trading system in 1997. The ASE has over 350 listed companies, primarily from the state of Gujarat.
4. Commodity Exchanges
Commodity exchanges are specialized exchanges that allow investors to trade in commodities such as gold, silver, crude oil, and agricultural products. In India, there are three major commodity exchanges: the Multi Commodity Exchange (MCX), the National Commodity and Derivatives Exchange (NCDEX), and the Indian Commodity Exchange (ICEX). These exchanges are regulated by the Forward Markets Commission, which is responsible for overseeing commodity trading in India.
5. Currency Derivatives Exchanges
Currency derivatives exchanges are specialized exchanges that allow investors to trade in currency, futures and options. In India, there are two currency derivatives exchanges: the NSE Currency Futures and Options Exchange and the United Stock Exchange of India. These exchanges offer investors the opportunity to hedge against currency risk and speculate on the movement of currency prices.
6. SME Exchanges
Small and medium enterprises (SMEs) are an important part of India’s economy, and there are a number of specialized exchanges that cater specifically to these companies. SME exchanges offer SMEs the opportunity to raise capital by listing on the exchange and issuing shares to investors. Some of the SME exchanges in India include the BSE SME Exchange and the NSE Emerge Exchange.
In conclusion, India’s securities market is home to a range of different stock exchanges, each catering to different segments of the market. The BSE and NSE are the largest exchanges, offering a wide range of securities to investors. In addition, there are a number of smaller regional exchanges, as well as specialized exchanges for commodities, currency derivatives, and SMEs. Together, these exchanges play a critical role in promoting the development of India’s securities market and providing investors with a range of investment opportunities.
Large cap stocks are also known as big caps shares that trade for corporations with a market capitalization of $10 billion or more. Large cap stocks typically have lower volatility, greater analyst coverage, best fundamentals and perhaps a steady dividend stream. Large caps are generally safer investments than the mid and small cap shares as the companies are more established. Check our blog on List of companies listed in NSE to get more Idea. Here are the large cap stock list
1. State Bank Of India (SBIN)
State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory body headquartered in Mumbai, Maharashtra. SBI is the 43rd largest bank in the world and ranked 221st in the Fortune Global 500 list of the world’s biggest corporations of 2020, being the only Indian bank on the list.
Fundamental Analysis
Market Cap ₹ 406,204 Cr.
Debt ₹ 4,536,570 Cr.
ROE 12.2 %
Sales growth 4.26 %
Promoter holding 57.6 %
ROCE 4.44 %
Stock P/E 11.5
Industry PE 9.05
2. AXIS BANK
Axis Bank Limited, formerly known as UTI Bank (1993–2007), is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It sells financial services to large and mid-size companies, SMEs and retail businesses.
Fundamental Analysis
Market Cap ₹ 195,309 Cr.
Debt ₹ 859,872 Cr.
Sales growth 6.41 %
ROE 13.6 %
Promoter holding 9.70 %
ROCE 5.59 %
Stock P/E 13.9
Industry PE 16.9
3. HEROMOTOCO
Hero MotoCorp Limited, formerly Hero Honda, is an Indian multinational motorcycle and scooter manufacturer headquartered in New Delhi. The company is one of the largest two-wheeler manufacturers in the world as well as in India.
Fundamental Analysis
Market Cap ₹ 52,866 Cr.
Debt ₹ 605 Cr.
ROE 14.8 %
Sales growth -4.55 %
ROCE 19.2 %
Promoter holding 34.8 %
Stock P/E 22.8
Industry PE 37.3
4. Godrej Consumer Products
Godrej Consumer Products Limited (GCPL) is an Indian consumer goods company based in Mumbai, India. GCPL’s products include soap, hair colourants, toiletries and liquid detergents.
Fundamental Analysis
Market Cap ₹ 79,649 Cr.
Debt ₹ 1,704 Cr.
Sales growth 11.3 %
ROE 17.1 %
ROCE 18.5 %
Promoter holding 63.2 %
Stock P/E 44.4
Industry PE 31.2
5. ONGC
The Oil and Natural Gas Corporation (ONGC) is an Indian oil and gas explorer and producer. It is under the ownership of the Ministry of Petroleum and Natural Gas and Government of India. Its headquarters is situated in Vasant Kunj, New Delhi.
Fundamental Analysis
Market Cap ₹ 168,827 Cr.
Debt ₹ 121,986 Cr.
Sales growth 75.0 %
ROE 19.6 %
ROCE 16.8 %
Promoter holding 58.9 %
Stock P/E 3.59
Industry PE 18.1
6. DRREDDY
Dr. Reddy’s Laboratories is an Indian multinational pharmaceutical company located in Hyderabad, Telangana, India. The company was founded by Kallam Anji Reddy, who previously worked in the mentor institute Indian Drugs and Pharmaceuticals Limited.
Fundamental Analysis
Market Cap ₹ 71,014 Cr.
Debt ₹ 3,384 Cr
ROE 11.8 %
Sales growth 13.1 %
ROCE 14.5 %
Promoter holding 26.7 %
Stock P/E 32.6
Industry PE 22.4
7. Bajaj Auto
Bajaj Auto Limited is an Indian multinational automotive manufacturing company based in Pune. It manufactures motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group. It was founded by Jamnalal Bajaj in Rajasthan in the 1940s.
Fundamental Analysis
Market Cap ₹ 107,682 Cr.
Debt ₹ 123 Cr.
ROE 19.4 %
Sales growth 19.5 %
ROCE 23.9 %
Promoter holding 53.8 %
Stock P/E 19.5
Industry PE 25.5
8. TATA Consultancy Services (TCS)
Tata Consultancy Services (TCS) is an Indian multinational information technology (IT) services and consulting company with its headquarters in Mumbai. It is a part of the Tata Group and operates in 149 locations across 46 countries.
Fundamental Analysis
Market Cap ₹ 1,206,755 Cr.
Debt ₹ 7,818 Cr.
ROE 43.6 %
Sales growth 16.8 %
ROCE 54.9 %
Promoter holding 72.3 %
Stock P/E 31.5
Industry PE 24.5
9. Hindustan Unilever Limited (HUL)
Hindustan Unilever Limited (HUL) is a consumer goods company headquartered in Mumbai, India.[3] It is a subsidiary of Unilever, a British company. Its products include foods, beverages, cleaning agents, personal care products, water purifiers and other fast-moving consumer goods.
Fundamental Analysis
Market Cap ₹ 527,953 Cr.
Debt ₹ 1,043 Cr.
ROE 18.4 %
Sales growth 11.5 %
ROCE 24.4 %
Promoter holding 61.9 %
Stock P/E 60.7
Industry PE 59.0
10.ABBOTT INDIA
Abbott India Ltd is one of the leading multinational pharmaceutical companies in India and sells its products through independent distributors primarily within India.
“A stock is a general term used to describe the ownership certificates of any company. A share, on the other hand reffers to the stock certificate of particular company . Holding a particular company’s share makes you a shareholder.”
The stock (also capital stock) of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are company known as “stocks”.
A stock is an investment. When you purchase a company’s stock, you’re purchasing a small piece of that company called a share.
A stock is a type of investment that represents an ownership share in a company. Investors buy stocks that they think will go up in value over time.
A share of company held by an individual or group. Corporations raise capital by issuing stocks & entitle the stock owners (shareholders) to partial ownership of the corporation. Stocks are bought & sold on what is called an Exchange. There are several types of stocks & the two most typical forms are preferred stock & common stock.
Owning a stock gives you certain rights & those rights can differ depending on the types of stock you own.
There are two main types of stock:
COMMON STOCK
PREFERRED STOCK
1. COMMON STOCK:
Common stock is a form of corporate equity ownership. It being primarily used in the united states. They are known as equity shares or ordinary shares in the UK.Common stock comes with voting rights; as well as the possibility of dividends & capital appreciation. Each share of common stock represents a share of ownership in a company. If a company does well or the value of its assets increases, common stock can go up in value. On the other hand, if a company is doing poorly, a common stock can decrease in value. Simply put, common stock allows investors to share in a company’s success over time, which is why they can make great long-term investments.
2. PREFERRED STOCK
“Preferred stock is also known as preference stock. The word “Preferred” refers to the dividends paid by the corporation. Each year, the holders of the preferred stock are to receive their dividends before the common shareholders are to receive any dividend”.Preferred stockholders generally do not have voting rights, though they have a higher claim on assets & earnings that the common stockholders.
Preferred shares can be converted to a fixed number of common shares, but common shares don’t have this benefit.Like bonds, preferred stocks are rated by the major credit rating companies. The rating for preferred stocks is generally lower than for bonds because preferred dividends do not carry the same guarantees as interest payments from bonds & because preferred stock holders claims are junior to those of all creditors.
Some things you need to know about stocks:
a. P/E RATIO –
The price to earnings ratio (P/E ratio) is the ratio for valuing a company that measures its currents share price relative to its pre share earnings (EPS)…. P/E ratios are used by investors & analysts to determine the relative value of a company’s shares in an apple to apples comparison.The ratio is used for valuing companies & to find out whether they are overvalued or undervalued.Earnings are important when valuing company’s stock because investors want to know how profitable a company is & how profitable it will be in the future.
b. CHART –
Chart reading is the single most important investing skill you’ll ever learn. To understand why stock chart are so valuable. Chart tells you a whole story about stocks. The weekly chart helps you see longer term trends. And daily chart helps you spot specific buy & sell signals while daily price fluctuation perspective.
c. Dividend –
If you don’t have time watch the market every day, and you want your stocks to make money without that kind of attention, look for dividends. Dividends are like interest in a savings account. You get paid regardless of the stock price. Dividends of 6% or more are not unheard of in high quality stocks. Before purchasing a stock, look for the dividend rate. If you simply want to park money in the market, invest in stocks with a high dividend. (For more, see Why Dividends Matter.)
d. Taxes Can Take A Bite Out Of Your Profits –
The FANG stocks – Facebook FB +0%, Amazon.com AMZN +0%, Netflix NFLX +0% and Google GOOGL +0% (Alphabet) — had a great run in 2015, with returns ranging from 34% to 134%, but from a tax perspective any investor who bought last year and eyeing the exits wants them to keep climbing. That’s because the one-year mark is a line of demarcation for the tax man.
Selling stocks, you’ve held for less than a year triggers a short-term capital gain, taxed as ordinary income. That could mean kicking back anywhere from 25% to 39.6% to Uncle Sam. But hold those same stocks for at least 12 months and the tax rate drops to 15% for most tax brackets.
WHY TO INVEST IN IT
Investing in the stock is the only way most people have of building real wealth. Stock is just one of many potential places to invest your money. Investing in stock is often risky, which draw attention to huge gains & losses of some investors.
One of the primary benefits of investing in the stock market is the chance to grow your money. Over time, the stock market tends to rise in value, though the prices of individual stocks rise and fall daily. Investments in stable companies that are able to grow tend to make profits for investors. Likewise, investing in many different stocks will help build your wealth by leveraging growth in different sectors of the economy, resulting in a profit even if some of your individual stocks lose value.
Stocks are risky This means they don’t have a guaranteed return and sometimes lose money. However, the long-run trend of the stock market has been undeniably upward. Stocks have the highest return of any investment asset over the long term. According to the Federal Reserve, the stock market has grown by an average of more than 10 percent a year over the past 50 years. During this same period, government bonds only grew by 5 percent a year. If you can stomach the market swings, you will see the highest return on your money with the stock market.
Purchasing stocks of companies operating in different sectors as well as segments is possible, which helps in optimizing the asset-allocation and provides diversification.
