What is the Right Time to Exit a Stock

Almost all companies need money to run their business, and at times, profit acquired from selling goods or services is not enough to align the working capital requirements. And several companies invite the general public to put some money in their company so that they can run it efficiently. By placing the money, the investors can get some profit. Firstly one needs to know about stock market basics.

What is the right time for you to exit a stock?

  • When the fundamentals of the stock fall down- one needs to sell the store when the fundamentals of the company are not the same anymore, like when they bought the stock and people must know that company is not coming up with any innovative products, Management is not taking the right decision, if the fundamentals of a company are continuously degrading Quarter-on-Quarter or Year-on-Year like the Revenue/profits are constantly declining.
  • When the company gets overvalued in no time, the share price of a fundamentally strong company will go high, but one should sell the stock and book profit if the prices go too high compared to their entry price in a brief period.
  • When one finds better stocks- it can be the right time to exit a store. If one considers a company whose fundamentals are better than your current stock and gives better performance consistently and under such a scene, they need to sell the previous store and grab the better opportunity.
  • When one needs money immediately- the only reason why people enter the stock market is to make some money, and when they need that money, they should sell their shares and exit. They need to sell the stocks when one actually needs the money, like paying for a new house, new car, and their kid’s tuition fee, etc.; well, there cannot be a better time to exit a stock than when one needs the money most.

Besides, that one needs to consider when not to sell a stock. For instance, if one bought 20 stocks of a company at Rs 500, then they need to assume that they did fundamental research and the stock is fundamentally solid and if the stock price reaches Rs 590 (+18%). They might think that let’s book the profit as they have already gained Rs 90 per share (+18%). So people need to consider the objectives before making a move.

To make profits here, they need multiple skills that can locate appropriate risk vehicles, enter positions at the right time. One needs to know that getting out at the perfect time isn’t challenging, but the main challenge is to have an eye for detail, and people must look for clues that may predict a large-scale reversal or trend change. No doubt, buy-and-hold strategies work, but exit timing strategies indeed play a crucial role.

What should one know about the stock market?

Stock investors- They are the ones who can keep their money in the stock for a more extended period, even for years, as returns are compounded over some time. They can use fundamental analysis and look at the company’s growth trajectory because their investment ideally grows with the company in the long term.

Stock traders- They ideally buy and sell within the same trading session and use technical analysis to understand which stocks to invest in. Therefore, one needs to learn technical indicators like momentum oscillators, Bollinger bands, charts, and others.

One needs to open a Demat besides a trading account as most investment platforms and brokers currently offer one with a Demat cum trading account.

The companies that need to be listed on stock exchanges need to be approach NSE, BSE, or both.  To understand the trend in the stock market in the best way possible, all the stock exchanges need equity benchmarks. Both BSE and NSE have a plethora of companies listed on them. It will be challenging for one siphon through this vast number of companies listed if they have to pick at least 30 stocks or look at what the bottom 100 are doing.

A collection of the topmost 50 companies listed on NSE is Nifty50, and a collection of the top 30 stocks listed on BSE by way of market capitalization is Sensex. Some of the leading companies are the ones that influence the stock market besides affecting the nation’s economy.

If one wants to gauge the entire stock market, then one can consider looking at Sensex. Besides that, there are some sectoral indices: Nifty Pharma, BSEBankex, Nifty PSU, and others. One must know when they are permitted to buy and sell shares to learn about the stock market basics in India.

The stock market works from 9.15 a.m. to 3.30 p.m, and during some holidays, the market is shut.

A company will need more capital when it is scaling up, expanding its business, etc. A company can quickly enter the share market and offer a certain number of shares depending on its market value, which investors can buy under such times. One will be paying the company some money and, in return, get to be part-owners, and when the value of shares increases, the value of shares investors own also shoots up.

One must wonder investors are creditors, but in reality, they aren’t

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