The first step is about determining your goals. Decide whether do you want to maximize your returns or want safety of your money. Your goals depends upon your age, financial conditions or other factors such as your risk appetite that how much risk can you take.

At early ages, e.g in your 30s, you can take high risk and look for higher returns but as you grow old, you prefer stability over income and the risk appetite decreases.

After deciding this, now look at the sector where you feel high growth would come. For example: IT, Banking, Energy, construction, financial sector etc.

After you have identified the sector, find companies which are good performing ones. Make sure that you buy stocks only if you understand the company.

But how do we find such companies? There are many ways such as determine whether a company has a competitive advantage or not. Competitive advantages are decided by learning about factors such as scale of business such as Reliance in Energy, uniqueness of it’s product such as Zomato in food delivery, intellectual property like Defence stocks with a new rocket engineor something other that suits you.

A company having a strong advantage over its competitors will help you to maximize returns.

If a sector has multiple companies that operate, then use financial ratios to determine a fair price for the stock. These ratios can be Price to earnings ratio or Debt to Equity ratio among many others. Look for a company with low P/E ratio and a low Debt to Equity ratio. Although there are many ratios but some of these ratios would also help.

Now if you can go further then dig into the financials of a business and start making projections for revenue growth, profit margin, and other expenses for the next several years.

Apart from these technical statistics one can also look for the managerial efficiency. If a company is run by a reputed, qualified professional, the chances of good results are higher.

One can also look at the shareholding pattern in the company. If the promoters are increasing stake, if FII and DII are increasing stake, there is more likely of the company doing good or expected to be doing good in the future. You can follow their patterns.

At the end, after all this, it’s now the time for your conviction and luck to help you out! Once you choose a stock, trust on it and stay invested. Keep in mind that returns usually don’t come overtnight. Patience is the last key!