Best stocks to buy today: how do you tell a good one?

To judge a stock, look at the company before the price of the day. These 4 questions help you sort, in this order.

Made-up example: two invented companies, A and B, put through questions 2 and 3.

In this made-up example, company B costs 3 times more for each rupee of profit, while its profit stays flat. A high P/E ratio is not always a flaw: buyers pay more when they expect strong growth.

A list of stocks to buy today knows neither your goal, nor your time frame, nor what you can afford to lose. It bets on the price over the next few days, which nobody knows in advance.

• Intraday trades often lose money. According to the SEBI study, 7 in 10 individuals who bought and sold a stock on the same day lost money in 2022-23.^[1]
• Costs eat up small gains. Example: you buy 10 shares at ₹500 (₹5,000) in the morning and sell them at ₹505. You make ₹50 before costs; if the round trip costs you ₹40, you are left with ₹10.
• A person paid to recommend a stock to you must be registered with SEBI as a research analyst.^[2] SEBI advises you to deal only with professionals registered with it, and it publishes the list.^[3]
• Tips received on WhatsApp or Telegram are a known risk: SEBI says not to follow unsolicited tips received on these messaging apps.^[3] It also warns against any promise of big, guaranteed gains with almost no risk.^[3]

To get started, a Nifty 50 fund gives you 50 large companies in a single purchase, instead of one single stock. The Nifty 50 groups 50 large companies listed on the NSE (National Stock Exchange of India, the national stock exchange of India).^[4] NSE Indices manages this index.^[5]

• A single stock can lose half its value: ₹50,000 then becomes ₹25,000.
• In a fund of 50 companies, a fall weighs less. Example: a company that makes up 2% of the fund loses half its value. Your fund loses about 1%, or ₹500 out of ₹50,000.
• You can follow the Nifty 50 price on Yahoo Finance, with a slight delay, under the code ^NSEI.^[6]
• An ETF (Exchange Traded Fund, a fund you buy on the stock market like a share) also copies the Nifty 50. Example: the Nippon India ETF Nifty 50 BeES, listed on the NSE under the code NIFTYBEES.^[7] The tool on this page uses this ETF to track the Nifty 50.
• To choose your Nifty 50 fund: read our article comparing Nifty 50 index funds.

A fund that copies the Nifty 50 follows the Nifty 50, minus its fees: it does not try to beat it.^[4] A few funds tracked by Donnie have done better than the Nifty 50 over 7 years. These are funds that invest in emerging markets, among other places.

• Invesco India Small Cap Fund Direct Growth returned +24.9% a year over 7 years, against +11.1% for the Nifty 50.
• Example: ₹50,000 invested 7 years ago would be worth ₹2,37,251 in Invesco India Small Cap Fund Direct Growth, against ₹1,04,739 in the Nifty 50.
• Bank of India Manufacturing & Infra Direct Plan Growth returned +24.2% a year: compare its curve in the tool.
• Quant ELSS Tax Saver Payout of Income Distribution cum capital withdrawal option Option Direct Plan returned +23.7% a year: compare its curve in the tool.
• What Donnie adds: you see the shares these funds hold, line by line, and an alert tells you when their managers buy or sell.

Three mistakes cost a lot: buying after a big rise, selling at the first fall, and investing money you will need soon.

• Buying after a big rise: a stock that has gained 50% in a month costs more for the same profit. Made-up example: at ₹750 instead of ₹500, with ₹25 of profit per share, its P/E ratio goes from 20 to 30.
• Selling at the first fall: a fall in the price does not, on its own, change the company's profit. Example: selling for ₹45,000 shares you bought for ₹50,000 turns a fall into a real loss of ₹5,000.
• Investing money you will need soon: if you have to get your ₹50,000 back in 6 months and the stock falls 20%, you are left with only ₹40,000.