Which stock should you buy?

Which stock should you buy?

In the equity market, stock tips are aplenty. Everyone believes themselves to be an expert just because they have a Trading and Demat account and have made some investment in the equity market! Therefore it is very important to have some basic knowledge about share market before you start investing in stocks according to share tips.

There are more than 6000 shares listed in India. But, broadly they can be categorized into four types:

 Growth stocks:  They are companies which grow faster than its industry or the market. Growth shares do not believe in paying dividends but reinvest profits for expansion and growth. They are marked by high P/E ratio and are always in demand due to potential price appreciation.

Value stocks: They are companies which have good fundamentals but are underpriced as they are temporarily out of favour. Value shares are great picks as they have a greater potential of growth. They have a low P/E ratio and low PBV ratio.

Income stocks: They are companies which regularly pay high dividends. These shares are often less volatile and may limited growth options. Profit from these stocks is in the form of regular dividends declared by the company. They are marked with higher dividend paying ratio.

Penny stocks: They are stocks with low price and low market capitalization. These shares are easy to manipulate because of low volumes. Investing in penny shares is extremely risky as these are extremely speculative in nature, illiquid and marked with volatile movements.

Your Guide to Indian Stock Market

 Your Guide to Indian Stock Market

Indian stock market is one of the best performing stock markets in the world. Indian indices like Sensex and Nifty have generated a return of around 15% in one year and more than 100% in five years aided by the booming Indian economy and an exponential increase in FII and FDI inflows.

Here is the guide to investing in stock market India!

To invest in share market India, you need to have a trading and demat account. Trading account is essential for you to buy and sell shares in the stock market. Demat account or Dematerialized account holds your shares in electronic and dematerialized form. You can open a Trading and Demat account with any stock broking firm in India. Angel Broking is one of the top share broking companies in India offering products and services for investing in Indian stock market.

To open a Trading and Demat account with Angel Broking, you need to submit the following documents:

1.       A copy of your PAN card

2.       Address Proof (Passport/Driving License/Electricity Bill/Telephone Bill/Bank statement)

3.       Passport size photographs

You can either trade online or offline in the stock market. In online trading, you can buy or sell shares yourself with the help of an online trading account. In offline trading, you have to call your stock broker to place buy or sell orders in the stock market. Online share trading offers ease and convenience as you can trade independently from anywhere!

Trading in Indian stock market is simple and easy! Account opening is hassle-free, brokerages are low and there many multi-bagger stocks in which you can invest and build wealth in the long term!

Stock Market Result Update on Sun Pharma for 2QFY2012

Stock Market Result Update on Sun Pharma for 2QFY2012 with a Buy recommendation and a Target Price of `569 (12 months).

Sun Pharma reported higher-than-expected 2QFY2012 performance. Net sales reported 38.3% yoy growth. Net profit grew by 18.7% yoy, driven by higher-than-expected improvement in OPM. We recommend a Buy rating on the stock.

Better-than-expected results: For 2QFY2012, Sun Pharma reported net sales of `1,895cr, up 38.3% yoy, mainly driven by the inclusion of Taro’s financials as well as strong growth in overall exports. The company’s OPM expanded to 41.4% in 2QFY2012 from 34.1% in 2QFY2011. Gross margin increased to 80.8% in 2QFY2012 from 75.4% in 2QFY2011. The improvement in OPM was higher than gross margin improvement because of lower other expenses during the quarter. Net profit during the quarter reported 18.7% yoy growth to `598cr.

Outlook and valuation: Sun Pharma is one of the largest and fastest growing Indian pharmaceutical companies. Management has guided for 28–30% top-line growth for FY2012. Growth reported during the year can also be attributed to the consolidation of Taro’s financials. Management’s guidance for FY2012E includes all growth aspects from Taro as well. We expect Sun Pharma’s net sales to post a 27.3% CAGR to `9,272cr and EPS to register a 21.4% CAGR to `25.9 over FY2011–13E. We recommend a Buy rating on the stock with a target price of `569.

Stock Market Result Update on GlaxoSmithKline Pharma for 3QCY2011

Stock Market Result Update on GlaxoSmithKline Pharma for 3QCY2011 with a Neutral recommendation.

GlaxoSmithKline Pharma (Glaxo) reported its 3QCY2011 results, which were below our estimates on the top-line and PAT fronts. The company’s OPM for the quarter came in at 29.0%, lower than our estimate. We continue to maintain our Neutral view on the stock.

Operating performance below estimates: For 3QCY2011, Glaxo reported 4.4% yoy growth in its net sales to `608cr, lower than our estimate of `643cr. The company’s gross margin came in at 60.0%, lower than our expectation of 63.2%. This led to OPM of 29.0%, below our estimate of 32.4%, for 3QCY2011. During the quarter, Glaxo reported a 7.7% yoy dip in its net profit to `146cr, below our expectation of `162cr, due to lower-than-expected OPM.

Outlook and valuation: We expect Glaxo’s net sales to post a 13.9% CAGR to `2,788cr and EPS to register a 14.6% CAGR to `86.9 over CY2010–12E. At current levels, the stock is trading 27.5x and 22.8x CY2011E and CY2012E earnings, respectively. We continue to maintain our estimates and, hence, remain Neutral on the stock.