Step 1 — Understand the business
Before any chart or number: what does this company sell, and
who buys it? Can you explain it in one sentence to a friend? "Asian Paints sells paint. People repaint
homes every few years." If you can't explain how the company earns money, skip it — there are 5,000 other
stocks.
Never buy a toy without knowing what it does. Never buy a stock without knowing what the
company does.