A presentation to guide new investor to demystify the Indian stock market and help them with stock selection.

1. By
R. Marimuthu

3. P.E = Stock Price/ EPS
EPS = Profit/Shares Outstanding
P.E = Price to Earnings ratio.
EPS = Earnings per share.
Profit = Profit earned by company for given period.
Shares outstanding = No. of shares in open market.

4. Stock price increases when
1. Company’s profit increases year-on-year.
2. Company reduces no. of outstanding shares (via
share buyback).
3. Increase in P.E (stock getting re-rated).

5. Company name: ???? Ltd Company name: ???? Corp
Stock price: Rs. 581/- Stock price : Rs. 13,850/-
Which stock will you buy?

6. Company name: ???? Ltd Company name: ???? Corp
Stock price: Rs. 581/- Stock price : Rs. 13,850/-
52week L/H: 110/820 52week L/H: 7,350/15,087
Which stock will you buy?

7. Company name:Tata Motors Company name:Page Industries
Stock price: Rs. 581/- Stock price : Rs. 13,850/-
52week L/H: 110/820 52week L/H: 7,350/15,087
Which stock will you buy?

8. Company name:Tata Motors Company name:Page Industries
Stock price: Rs. 581/- Stock price : Rs. 13,850/-
52week L/H: 110/820 52week L/H: 7,350/15,087
Stock P.E : 26 Stock P.E : 65
Which stock will you buy?

10. 1. Type of Industry (cyclical or non-cyclical)
2. Nature of the business (many competitors?)
3. Growth and profitability of the company
(refer to company’s financial statement)

11. 1. Creating “Real Product Differentiation” through superior technology or
features (e.g: Apple’s iPhone).
2. Creating “Perceived Product Differentiation” through trusted brand or
reputation (e.g: Coca-Cola).
3. Driving “Down Cost” and offering a similar product or service at a lowest
price (e.g: WalMart, GEICO).
4. Company with “Proprietary Advantage” (e.g: Patents by Pharma companies).
5. Locking in customers by creating “High Switching Cost” (e.g: Medical device
companies, Cellphone companies prior to number portability ).
A company has an “Sustainable Competitive
Advantage” if any one of the following is true.

13. Screenshot courtesy money.rediff.com
Desired: Year on year increase in Sales and Operating Profit. The
Interest being charged must be manageable.

14. Suzlon
Unitech
Screenshot courtesy money.rediff.com

15. Screenshot courtesy money.rediff.com

16. Desired: Positive Net cashflow (screenshot of Cash Flow Statement of Lupin)
Screenshot courtesy money.rediff.com

17. Screenshot courtesy money.rediff.com

18. 1. Cloning
2. Tracking of bulk deals
3. Stock screeners

19. A. Cloning of renowned investors (i.e, buy the stock
when they buy).
E.g: Dolly Khanna, Sanjay Bakshi.
B. Cloning of top holding of mutual funds with good
track record.
E.g: Top 2 portfolio holding of “IDFC Premier Equity Fund”
mutual fund.
Screenshot courtesy moneycontrol.com

20. Screenshot courtesy bseindia.com
Tracking of large equity transactions via block deals
from bseindia.com website

21. Screenshot courtesy hdfcsec.com
Stock screener websites where you can filter
stocks as per pre-defined or customized criteria.
E.g: www.screener.in, www.hdfcsec.com/StockScreener/

22. 1. Type of Industry.
2. Nature of the Business.
3. Past profitability and future prospects of the
company.
4. Quality of the Management.
5. Build a conviction to buy and hold the stock.

23. 1. Find better investment opportunities.
2. Earlier conviction no longer holds good.
3. Underlying business of the company
deteriorates.
4. Regulatory changes.

24. Concentrated portfolio of stocks
vs
Diversified portfolio of stocks

25. “Risk comes from not knowing what you’re doing.” – Warren Buffet
“Indeed, borrowed money has no place in the investor’s tool kit:
Anything can happen anytime in the market” – Warren Buffet
To make money in stocks, you need to have vision to see them,
courage to buy them and patients to hold them. Patience is the
rarest of the three. – Thomas Phelps
“If investing is entertaining, if you’re having fun, you’re probably
not making any money. Good investing is boring.” – George Soros
“Market forecasters will fill your ear but will never fill your wallet.” –
Warren Buffet
“So, if you meet someone who is rich or powerful, always aspire (to
be like them), but never envy.” - Rakesh Jhunjhunwala
Famous quotes from investors

27. 1. One Up on Wall Street by Peter Lunch
2. The Five Rules for Successful Stock
Investing by Pat Dorsey
3. The Investment Checklist by Michael Shearn
4. The Intelligent Investor by Benjamin Graham

28.  https://fundooprofessor.wordpress.com/
 http://www.drvijaymalik.com/
 http://tyroinvestor.com/
 www.valuepickr.com/
 http://www.tankrich.com/
 https://janav.wordpress.com/
 http://wisewealthadvisors.com/

29. Q & A

30. Thank You
E-mail: marimuthu.pesit@gmail.com