It is said that well begun is half done. But what about the other half? Smart investors like you know that their job does not end with stock selection or building a good portfolio. That is just half of the job done. To ensure wealth creation in the long-run, you need to monitor the stock portfolio on a regular periodic basis. But does that mean that you need to daily check the stock prices? The answer is a loud No.
Read on to know how you can monitor your stock market portfolio in a sane and effective manner.
1. Keep yourself updated
Remember when your parents or teachers would ask you to keep yourself updated with current affairs? Well, that will pay off even while monitoring your stock portfolio. You should read up about the company and also any new developments in the industry. This will ensure that you are abreast with any policy revisions, regulatory changes or any macro-economic factor that might impact the profitability of the sector or stock portfolio.
You do not need to rely only on newspapers. You can leverage technology for this task. Google Alerts make this task easier and more real-time. Especially for small or mid-cap companies which may not enjoy wide coverage by mainstream media. You can set Google Alerts for companies in your stock portfolio and enjoy information at the click of a button. Many financial service providers also provide important news and market highlights on their portals.
2. Check out corporate announcements
Listed companies need to inform the stock exchange about all important events or company decisions that may impact their stock price. This could be any new acquisition, employment or resignation of key/senior personnel, etc. You should keep an eye out for such corporate announcements. This information is easily available on the company’s as well as the stock exchange’s site. Some companies also inform the shareholders about such corporate announcements via emails.
Ensure to go through the details of corporate announcements as they will help you to monitor the stock portfolio. Moreover, it can influence you to buy more or sell from your share portfolio.
3. Go through the company results
Indian companies release their results on a quarterly basis. It is important to study the quarterly performance reports of your share portfolio. However, the important point is not to get overly concerned if the results are poor in a few quarters. Each company goes through ups and downs. The important factor is consistency. So, do not go into panic (and exit) mode if you notice a dip. Try to analyse the reason behind the poor performance and look at the overall economic scenarios before taking any decision. Continuous poor results (especially when the economy is doing fine) is a sign that you should consider removing that investment from the stock portfolio.
Annual reports also contain information about the company’s future growth plans or strategies. This can influence your decision to stick around or bid adieu to their stocks in the long-run.
4. Observe changes in the Shareholding Patterns of promoters
Companies declare their shareholding pattern on a quarterly basis. These details are published on the company’s and stock exchange’s website.
Shareholder pattern can be a great indicator of the overall health of the company and its future. While analysing the changes in the company’s shareholding pattern, you need to focus only on the promoter’s shares. Promoters increasing its stake in the company is a positive sign. Promoters have access to the most pertinent and intimate information about the company. Hence, they will go for a higher share in the company only when they feel that the prospects are good. On the other hand, if you notice that there is a consistent reduction in the promoter’s shareholding, take it as a red flag. Try to figure out the reason behind the same. Sometimes, it may so happen that they sell their stake to raise funds for some personal exigency. But such events are not usually recurrent in nature. Hence, do a thorough root-cause analysis. If you feel that the promoters are trying to move out of the business, it is a good enough indicator for you to follow suit.
5. Look if promoter’s shares are pledged
When promoters fall short of financial resources to meet the business’s working capital requirement or need to fund another venture, they can pledge their shares for loan money. Their shares act as a security or collateral for the borrowed funds.
Like the shareholding pattern, companies need to disclose the pledge details of the promoter’s shares on a quarterly basis. You should follow this information and look for any alert signs. Generally, an increase in the promoter’s share pledging is seen as a negative indicator. It indicates that the business is under financial stress. If the promoters are not able to repay the loan amount, the lender can sell the shares in the open market. This will adversely impact the market share prices and bring down the value of your stocks portfolio.
6. Credit Rating
Whenever a company raises debt, they need to get themselves assessed and rated by any of the accredited credit rating agencies (CRISIL, ICRA, CARE, India Ratings, etc.) These agencies review the company’s financial health at least on an annual basis and publish the information on their website. Along with the rating, they also give a summary document which gives an overview of the strengths and weakness of the concerned company.
You should review these credit rating reports. They are an easy way of tracking the financial well-being of a company. If you notice a rating downgrade, take it as a serious matter and analyse it in detail. It can significantly help you to save or grow your hard-earned money.
Now you know what are the “DOs and DONTs” when it comes to monitoring your stock market portfolio. But still, if you feel that you need some support, don’t worry. Help is just around the corner.
Many financial service companies collate all these data points and publish it on their website. This is highly useful for readers as all the relevant information is available in one commonplace. Also, their in-house analysts study the available information and give their expert opinion on the possible trends, etc.
One such service provider is IndiaNivesh. It is a full-fledged financial solutions organization and offers a range of services in the domain of mutual funds,
equities, derivatives and commodities, insurance, strategic investments, wealth management, etc. IndiaNivesh’s team has a collective experience of 300 years. Their in-depth understanding of the Indian markets, ability to customise solutions and leverage technology gives them a clear edge. So, next time you find yourself wondering – How can I monitor my stocks portfolio? Reach out to the expert team at IndiaNivesh.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.