How should I invest in the Indian stock market?

I would like to invest in the Indian stock market to diversify my portfolio which is in cash, assets, and insurance currently. How do I go about it? How much should I invest and in what stocks? I would like to start with Rs1million.

To start with, depending upon your understanding of Indian and global stock markets, you may choose to invest part of the available proceeds in index funds once the market cools off. For the balance amount to be invested in Indian stocks we suggest that you do your own research to evaluate the performance of sectors that are resilient and then choose large cap or mid cap stocks accordingly. Ideally, you may also wish to explore a systematic investment plan, to initiate investments in target company shares on a monthly basis and accumulate them over a period. Investments for a sustained period lead to considerable benefits if you set target returns, continue to review the performance of your investments from time to time and encash these returns when targets are achieved. In the medium term, if the dollar continues to weaken, commodities may rally and so would stocks.

From your query, we understand that your portfolio does not include exposure to precious metals. If that is the case, you may also wish to invest part of the available proceeds in precious metals.

Investment in stock markets is always subject to market risk and you should continue to review your investment portfolio periodically.

— The writer is CEO of ZTI Global