How to Build a Stock Watchlist
Objective: Know how to put together a hand-picked list of stocks to keep an eye on, to analyze and act on when the conditions suit your strategy.
Why a Watchlist Matters
A watchlist helps you:
1. Try not to make impulsive decisions (e.g. Zomato buying because it is a trend).
2. Follow the opportunity systematically (example Reliance Industries getting close to support).
3. Keep up with sectors/companies you own.
Example:
– 2020 Crash: Those who were pre-set watchlist made the most of the underpriced stocks like Asian Paint and HDFC Bank.
Step 1: Define Your Criteria
Create your watchlist based on your strategy:
For Value Investors (Fundamental Focus):
– Metrics: P/E < Industry Avg, ROE > 15%, Debt/Equity < 1.
– Indian Examples:
– ITC (P/E 25 vs FMCG Avg 35, ROE 24%).
– Tata Motors (EV growth potential, cyclical industry recovery).
For Growth Investors:
– Metrics: Revenue growth > 20%, High ROCE, Expanding margins.
– Indian Examples:
– Tata Power (renewable energy expansion).
– Affle India (digital advertising growth).
For Technical Traders:
– Setups: Breakout stocks, RSI oversold, Bollinger Band compressions.
– Indian Examples:
– HDFC Bank around 200-day MA support.
– Infosys consolidating near ₹1,500 resistance.
Step 2: Tools to Build Your Watchlist
1. Stock Screeners
– Free Tools:
– Screener.in (fundamental filters).
– TradingView (technical setups).
– Paid Tools:
– Trendlyne (institutional-grade analysis).
2. News Trackers
– Sources:
– Economic Times (sector trends).
– Moneycontrol (company-specific news).
3. Alert Systems
– Fatca Price Alerts: Set alerts in Zerodha Kite or Google Finance.
– Event Alerts: Earnings Dates, Dividends Announcements (use Dividend Yield ).
Step 3: Organize Your Watchlist
Step 4: Maintain & Update
1. Weekly Review:
– Remove out stocks which cease to be requirement fits (e.g. Vodafone Idea debt spike).
– Create new candidates (If need be, Tata Elxsi for AI/tech growth).
2. Track Triggers:
– Sample: Buy Asian Paints if P/E goes to less than 50 (industry average 55)
Tasks for You 😊👍
1. Create Your Watchlist:
– Use Screener.in to narrow down to 5-10 stocks based on your criterias (e.g., ROE > 20%, P/E < 30).
– Note things such as “Wait for Q4 earnings” or “Follow debt reduction.”
2. Set Alerts:
– On Zerodha Kite or TradingView, set price alerts for your watchlist stocks (e.g., Reliance below ₹1,200).
3. Backtest:
– Evaluate past watchlist pick performance history (e.g., Infosys in 2020) to narrow down criteria.
Common Mistakes to Avoid
– Overloading: Watching 50+ stocks (top 10-15 high-confident stocks).
– Ignoring Macros: Not accounting for RBI rate hikes/sector reforms.
– Static Lists: Omitting update of triggers (e.g., Yes Bank pre-collapse).
Key Takeaways
1. Quality Over Quantity: A focused watchlist beats tracking hundreds of stocks.
2. Discipline: Follow your trigger (e.g. Buy at RSI 30 only, Not FOMO at RSI 70 only)
3. Adopt: Reform yardsticks as markets develop (e.g. transition from IT to renewables).
FAQs for Indian Investors
– “How many stock to watch?”
Begin with 10-15 cross sector (e.g. 3 FMCG, 3 IT, 2 banks, 2 renewables).
– “How to handle earnings season?”
Add the Earnings Date to your watch list & be on the lookout for how the stock trades after the earnings announcement
– “Best free alert tools?”
Google Finance, Moneycontrol, and broker platforms (Zerodha/Upstox).
