There are thousands of stocks publicly listed in the Indian stock market. And researching them one-by-one to pick the stock market analysis one that suits you the best may take weeks. That’s why these stocks are divided into different categories to help investors/traders classify these stocks to help them study better.
Stocks may be categorized based on different factors like their size, industry, location, etc. In this article, we are going to discuss five popular types of stocks that every investor should know
Types of Stocks That Every Investor Should Know | stock market analysis
Stocks are often categorized based on the sector or industry they fall like. Stock market analysis Automobile stocks, Energy stocks, Technology stocks, etc. All the companies that are related to automobiles will be considered as automobile stocks. Maruti Suzuki, Tata Motors, Ashok Leyland, Hero Motocorp, etc.
However, sometimes it might be a little difficult to quickly. Classify companies when their business model lies in two or more industries. For example, ITC Limited is a conglomerate, although it generates more than sixty percent of their revenue from tobacco products.
Based on the business cycles, the stocks can be classified as Cyclicals or Non-cyclical (Defensive) stocks.
- Cyclical Stocks: As the name suggests, cyclical stocks are those that move in the direction of the stock market analysis. That is when the economy is doing well. The stocks go up and when there is a downturn in the economy, the value of the stock goes down too. Cyclical industries usually may include services like automobile, construction, hotels, travel and tourism, luxury products, etc.
- Non-Cyclical/Defensive stocks: The revenue and cash-flows and share price of non-cyclical stock market analysis companies continue to do well during an. Economic slow-down or depression as they are industries that produce the basic needs of life that people will continue to consume.
- Defensive stocks include goods and services in industries that are not affected by market fluctuations such as utilities, food, and medicines. It is basically any good or service that people will buy whether or not the economy is doing well. Moreover, Tobacco, Alcohol producing companies may fall into this category as people continue to consume these products even during a bad economy.
