Checks before Investing

 Share Holding Pattern

• Share holding pattern shows the ratio of shares held by different stakeholders of a company like Foreign Investors,Shares against Mortgage(Pledged shares),Promoters Share and Retail Investors i.e. General Public
• Let's look at ourselves first i.e. the retail investors if you see the retail investors are only growing and others are going less then that dosen't means the company is gaining popularity it means all other stakeholders are selling shares to retail investors and are planning to sign off. This is a risky affair
• Shares against Mortgage or Pledged shares are those against which loans are taken i.e these shares are kept with Stakeholders as security. If this is increasing on yearly basis and the shares with Promoters is less than this amount and this gap is increasing on daily basis then its's an alarming sound that company is going in debt.Such a purchase is risky and must be avoided.
• Promoters Shares constituent a major part in this process they must increase on yearly basis if there is a downfall for a couple of years wait for the results of next year if the response is same then company's owners are selling off their equity to other's Stakeholders. Any good news of such a company must be avoided.Because owners are running away from company.
• Foreign Investors also play a lighter role if you see them running away from Shares on permanent basis i.e for past 5 years they have declined then its a cause of worry.

Put Call Ratio

• The put-call ratio is a measurement that is widely used by investors to gauge the overall mood of a market.

• A "put" or put option is a right to sell an asset at a predetermined price. A "call" or call option is a right to buy an asset at a predetermined price.

• If traders are buying more puts than calls, it signals a rise in bearish sentiment. If they are buying more calls than puts, it suggests that they see a bull market ahead.