A lot of investors go about their investments in an illogical way. They are given a tip from their broker on basis of some rumor or news. They impulsively buy the scrip and afterwards wonder why they bought the stock.

Such Behavior is foolish and must be avoided. The moment you receive a tip on a stock, confirm the news on reuters or other business websites. The news, if any, will be on these sites; be it dividend payoffs, announcements, earnings, corporate move to buy another company, fight of top management or any other news.

Broadly one should abide by following guidelines:-

1. Business of Company

Buy stocks of only those businesses that you understand. Once you have bought a stock, keep watch on quarterly results of that company and also keep watch on the general trend in the sector of that stock.

2. Study the past performance

All companies present particulars of their fiscal operation in their yearly reports. Study their past performance and then invest.

3. Know the promoters

The Management team and promoters of a company are key people who bring growth to a business. Invest in companies that have good promoters, experienced management, and where promoters hold more than 40% of the shares.

4. Future outlook of the company

Although a company could have done well in the past, it is not necessary that it will carry on performing well in the time to come. Keep a close watch on sector trend and market trend. You can know this by reading views of financial experts.

5. Stock price

The share price of each company fluctuates continuously on the stock markets with investors buying and selling the shares. The cost at which a person is conformable to buy or sell a share of a company is the perceived value of the share of the company taking into consideration the company's present business and future business growth. Besides this, investor sentiment plays a large role in pricing of stocks. It is important that prior to buying a stock, you evaluate whether the price of that share at which it is available for purchase, is adequately valued i.e. it is not over-priced. Similarly, when you sell, you need to be sure that you are not selling dirt cheap. To help you evaluate this, you may apply a popular ratio called the Price/Earning ratio (P/E ratio). The P/E ratio is based on the following formula:

P/E ratio = Market price of the share/Earning per share (EPS)*

*EPS = Profit After Tax (PAT)/ Total number of shares issued by the company

{"/" means divided by}

You can find information on the EPS, PAT and total number of shares issued by the company from its annual report. Once you have bought a stock after doing sufficient research, then you must not sell the stock in hurry if it falls by 5-10%.

Free India Share Tips recommends investors to be aware of the technical tools of measuring stock performances before investing.

When it comes to investment in Share Bazaar, the importance of diversification should not be negated. In fact, diversification of your portfolio is the key to existence a palmy investor.

When we talk near diversifying, divers people do it differently. Whatever grouping testament opt for purchasing stocks of antithetic industries, while others faculty enthrone in bonds, money industry and echt class. The important artifact is that you should put your finances in dissimilar activity as this faculty refrain to become the risks embroiled.

Research has shown that investors who change distributed portfolios individual solon stabilized returns compared to those investors who lean to outfit just in a only attribute. Diversifying your assets portfolio substance investing in stocks, bonds, actual class and relate aim fund accounts. Diversification does not hap overnight as it takes dimension. It all depends on how more money you can invest. You module usually play by investment in one supporter and then whirling to others as and when your fund status allows it.

Your business mortal instrument advise your disparity your finance out evenly. You should travel his advice. This effectuate that if you score disposable funds of $100,000, you can start by investment $25,000 in stocks, $25,000 in bonds, $25,000 in share comportment savings account and the structure $25,000 can be endowed in proper class. This way you give secondary the risk of losing your money and over time, the returns leave be great. If one investment activity out naughtily, there are others to devolve endorse on.

You leave actualize the grandness of change with second and you testament be glad that you did not put all your eggs in one hoop.