Last Updated on February 12, 2024 by Saira Farman
Equity shares have been a long investment option for investors in the stock market. Investing in equity shares allows investors to earn higher returns. It grows its money substantially through long-term investments. Equities shares also give rise to another popular category of investment instrument, mutual funds. Throughout the years, equity shares’ meaning has changed from an optional to must highly recommended investment choice among investors. The ability to offer higher returns than most other investment options has increased their preference by many to meet long-term financial goals.
After making the year 2021 splendid and stellar for investors, equity shares have garnered further discussions for 2022. If you are among the ones looking forward to investing in equity stocks in 2022, here are the key lessons you should learn to make sound investment decisions.
Make proper investment planning while picking up penny stocks
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The Indian equity market had one of the best times in 2021. The Nifty 50 index, after recovering from the blows of the COVID pandemic soared and scaled new height. The benchmark index touched the mark of 18,600 points before making any major correction. At this market, the market and its major stocks got much over-valued. This pushed a healthy correction and now all the top stocks such as Reliance, TCS, HDFC Bank and others have corrected more than what was anticipated. Opportunities like this, when the market is very light, gives us the best time to pick up top equity shares. As of mid-February 2022, Reliance Industries is done by more than 400 points from its all-time high, TCS is down by around 300 points, HDFC Bank has also lost 300 points after crossing 1700, etc. You can include these equity shares of top companies in your portfolio for the long term.
Although we have found a way out of the COVID pandemic, there is still a lot to go. The rise of the Omicron variant in the world has increased fear in the market. This added to the poor inflation data from the US, interest rate hike by US Fed, geopolitical tension between Russia and Ukraine, and several other such factors have forced all the major global markets to enter into a phase of consolidation. Although the markets have reacted negatively to the negative global cues, such opportunities are generally considered to be best for picking stocks. However, the investment approach should be staggered. For example, if you have enough liquid funds for investing in equity shares in 2022, invest whenever you get good market dips instead of buying when the market is performing well.
You must be knowing that there are several indirect ways as well of investing in equity shares, in which mutual funds are the most popular ones. Although you buy fund units while investing in mutual funds, your money gets invested ultimately inequities. If you have running mutual fund SIPs in 2022, continue the same without making any change. Besides, consider including a couple of debt and gold funds along with your equity mutual funds to contain market risks and protect returns during inflation.
The Indian stock market has started the initial month of 2022 by correcting and consolidating. Therefore, as an investor, you should wait for the market or its sectors to give a clear breakthrough in either of the directions. You should avoid guesswork even for top stocks. Besides, the most important thing to avoid this year is taking any risky best, i.e; buying stocks that are yet to perform. If you are not confident enough in any stock, it is better to avoid it at all.
If you have not diversified your equity shares portfolio yet, the year 2022 can prove to be the best time for the same. The prices of the best stocks have already tanked enough, which has made those affordable for many. You can buy such stocks and diversify your equity portfolio to make it stable in the long run. By doing this, you can easily deal with the market risks in 2020 and earn steady returns throughout.
Well, we are in a digital age where software, AI and tech rules every industry. The same can be said for the stock market as sorting high-quality stocks to invest in is not work full of hassle. You can easily select top stocks for your equity shares port. olio in 2022 by using a stock screener. A stock screener offers you to use several filters and choose stocks based on your preference. You can filter and sort stocks from different sectors, based on their trade volume, closing price, P/E or P/B ratio, market capitalization, and more. This helps you to get very refined results with the best possible stocks according to your submitted query.
To sum up, it is expected that 2022 will also show a similar momentum to 2021 if things go well in the favour of the stock market. Several companies have become public in the last year and even more, are going to get listed this year. With such several options at your disposal and a tool like a stock screener, you can make sound and better investment decisions in 2022. Follow the aforementioned tips and stay on top of your investment to earn healthy returns by investing in equity shares.