Share market is a place full of risk and joy .When we invest in the share market we do not know about the future so it is an uncertain market and a single wrong decision can give us a huge loss. So, we must have to analyse the information which is present in the market from various sources such as newspaper ,internet ,magazines ,television etc.
Before investing in the share market we should analyse some of the shares according to the economical ,political , industrial and through the company’s information.
In the economical analyse we take the view on the following things such as
- Foreign exchange rate
- policy of central bank
- Rating give by various recognised credit rating agencies
- Taxation structure of the government for the particular industry in which we want to invest our money
- Debts position of the country
- Foreign investment policies of the government and so on.
When we go for the industrial analysis . First of all we have to classify the industry such as mining ,services ,retail ,manufacturing industry etc. We should also analyse the industry life cycle because the risk varies according to the stages.whether it is in pioneering stage ,expansion stage ,stabilisation stage or in decay stage. As the risk is high in the pioneering and decay stage because at that time the growth of industry is uncertain whereas the risk is comparatively low in the expansion and stabilisation stage.
Some important qualitative factors that define an industry are
- Labour condition
- Industrial policy of the government
At last we will do the company analysis and we should analyse the following variables
- Sales position
- Competitive position
- Dividend policy of the company
- Capital structure etc.
After analysing the above factors we can invest our money very smartly.