Once you have made your investment in shares of the companies you have selected, you cannot afford to simply forget about your investments and hope that someday, when you need the money and you check on your investments, they would have significantly risen in value. As stated earlier, companies go through business cycles of ups and downs, which affect their share prices. Not only this, companies also go through mergers, acquisitions, changes in managements, new business developments, etc., all of which affect their stock prices for the better or worse. You need to periodically monitor your company’s performance. The periodicity could be quarterly since companies report their results on a quarterly basis. Use ‘Ratio Analysis’ to study the company’s quarterly performance.

In addition to assessing the company’s performance, you need to keep track of developments in the economy since this affects the businesses of all corporates. For instance, in a year when the monsoons are good, companies’ businesses show a positive impact, especially those, which are directly affected by the monsoons. Similarly, a high growth in the country’s Gross Domestic Product – GDP (the total market value of all the goods and services produced within the country during a specified period) indicates prosperity and high purchasing power in the hands of the consumers, which means good overall business prospects.

With India becoming an integral part of the global economy, most companies’ are impacted with global developments. For instance, if the US raises or lowers the Fed rates, the impact is felt in our country, too. A hike in Fed rates will result in money moving out of our country towards the US, which will adversely affect our capital markets and the business environment. The situation will reverse in case of a fall in Fed rates. Similarly, if countries lower or increase their import quotas, our exporting companies are impacted. This implies the need to keep track of global market developments.

Information on the economy and news on the global markets are available in daily business publications and websites of foreign business publications.