Best Stock Picking Strategies for Beginners 2026

They follow.

• Buy based on tips
• Chase low-priced shares
• Panic during market falls
• Sell good companies too early
• Hold bad companies too long

Beginner Mindset: Think like a Business owner,Not a Trader

Before buying any stock, ask yourself.

• Would i be comfortable owning this business if the stock market closed for 5 years?
• Do i undrstand how this company makes money?
• Will people still need this prodcut or service in the future?

Never buy a stock you don’t understand.

you don’t need a MBA or finance degree, you just need clarity.

Ask These Simple Questions:

• What product or service does the company sell?
• Who are its customers?
• How are its customers?
• Is demand increasing or decreasing?
• Who are its competitors?

There are generally four steps for institutional investors to operate a stock:-

1.If institutional investors want to control the price of a stock. They must first buy a large amount of a stockk and complete position.

2.Institutional investors aim to clear out floating chips, promoting less committed stockholders to sell their stocks.

3.Instituional investors will drive up stock prices significantly.

4.Instituional investors sell stocks at high prices and sell at profits.

Portfolio construction may seem an easy task, but the truth is that proper protfolio allocation is one of the most complex part of the successful investing.

Properly diversified portfolio must have limited numbers of share but diversified across the sectors.

How many times a stock will move up in future depends on earning growth not on how many times it moved during.

Quality midcap and small cap outperformed quality large caps on every front across any market cycle.

Avoid stock having market capitalization of less than 300 crore with promoter’s holding less than 20% stake.

“Be yourself,don’t follow the crowd”

Gold is considered as best hedge against equity.

Big ticket acquisition is not necessarily a good deal for investors. Be aware from stocks those are going for acquisition that funded by external debt.

the first step for any achievement is to dream big, believe on.

“Every expert was Once an amateur,don’t wait for the perfect timing start right now.”

Don’t blame others, take the responsibility of your failure, accept your mistakes & learn the most from it.

First Step:-

Last three years average return on equity (ROE) & return on Capital Employed (ROCE) both are greater than 20%.

Debt to equity ratio is less than 1 (or heavily reducing for the last few years).

Promoter Holding should be greater than 65%.

Promoter pledge less than 10% of their total share holdings, or there is a clear indication that it will fall below 10% soon (better if it NIL).

Last three years Compound Annual Growth Rate (CAGR) sale growth rate is more than 10%.

Last three years Compound Annusl Growth Rate (CAGR) profit growth rate is more than 12%.

After analyzing this ratio, you will get 40-80 companies.

Second Step:-

This step is time consuming as it requires manual intervention. First step can complete by screeners. But the problem is numbers can’t tell the full story, there are many hidden facts behind those figures.

Valuation Step:-

“If the stock under consideration has P.E. ratio of more than two times of last there years average EPS growth then avoid the same”.

Stock Price Movement:-

as a final and last stage, conduct price moment test. In spite or having all the positive numbers if you find that the stock is generating a negative return over the last three years then avoid.

If last three years annualised return and last one years return both are negative then avoid the stock, only consideration stocks for investment having last three years annualised return is more than 10% with last one year’s return is positive.

1.Average last three years return on equity (ROE) is less than 10%.

2.Debt to equity ratio is more than 1 for the last three years and no sign of falling it down.

3.Promoters pledge more than 30% if their total shareholdings and no sign of falling it down.

For example, if promoters hold 50% stake in the company, check out whether more than 15% of the stock market is pledge or not.

Based on this three parameters, our decision is,

1.If all those parameters hold true for a particular company, then avoid the stock.

2.If any one of those three parameters hold true, ten the stock requires in-depth attention.

(Best thing is avoid this stock also you have 5000+ Stock list).

When Sell The stocks ?

The most important thing is when sell the stock?

You can’t buy on bottom and sell on the top.

When you buy the stock, then something reason behind on taht buying. when your purpose of buying is clear then go with the stock.

Always exit at the first sign of trouble it doesn’t matter whether your investment is at loss or at profit.

Immediately exit from a stock where your original purchase reason is no more valid. Don’t buy repeat after selling the stock.

Selling won’t be a problem if your purchase reason is clear. Develop a pre-defined exit strategy at the time of investing.

Don’t sell to purchase at lower level’ you may not get lower rate of entry. Further, frequent buying and selling increases transaction cost and tax that eventually reduces overall return.

Too much focus on purchase rate can reduce the chances of profit maximization.

In 95% cases investment during bear market yields positive result.( Provided you hold the same for nect 1-2 years).

Over short run stock price of the best managed company can drop down without panic and sometime meaningless delight.

Don’t follow stock prices quotes twice or thrice in a day. It creates unnecessary panic and sometime meaningless delight.

Don’t focus on index movement.

Don’t try to predict near term index movement, you are not investing in index, you are investing in stocks.

Considering the minimum holding period of 1 year, investor’s can’t suffer loss investing in deep bear market.

How To Avoid Loss In Stock Market?

The only way to accumulate wealth from the stock market is to invest in high-quality business (stock) and hold the same for the long run.

You can’t make money consistently via any form of short-term trading (Intraday, F&O, Margin Trade, Etc.,)

Your broker, stock exchange and government can only become rich from short-term trading.

Don’t get tempted by fancy stories in stock market, don’t invest in stocks with borrowed money. It carries significant amount of risk.

Improvement Key Point Of Market:-

Equity investing is not risky rather staying away from equity investment is risky.

After adjusting tax and inflation, bank’s fixed deposit yield a negative return.

Equity investment is the most convenient option for long-term wealth creation.

Investment in stocks is just like during a car, if you master the subject, it become easier.

Lack of knowledge is the primary reason for widespread misconception and lowest retail participants in the stock market.

A stock market is nothing but a partial ownership in the business.Treat yourself as an owner of the business.

Before considering equity investment, invest in knowledge, investment in knowledge pays the best interest.