India’s market ecosystem has expanded rapidly, with millions of new demat accounts opened in recent years. Along with that growth has come a flood of commentary, from television debates to short videos and messaging groups. A person searching for 10 best shares to buy today may encounter dozens of conflicting opinions within minutes. Someone seeking intraday stocks for today will find even more urgent claims, often delivered with great confidence. Learning to separate genuine signals from hype is now a core investing skill, and this article offers a practical framework for doing so.
Recognise How Hype Is Manufactured
Often there is some distinct criteria to identify hype. A rise in volume and price with a narrative attached, which the Influencer/groups will start pushing. Others begin to get involved due to the fear of missing out, causing a sharp price acceleration. The initial buyers sell, causing the stock to fall sharply. This will lead to future investors entering at high prices and losing.
Signs of hype:
Promises of a guaranteed return. Words such as HURRY INSIDE ONLY or last chance to invest. Any push to pass the message along. Advice based around the use of screenshots.
Scrutinise the source
If you aren’t sure who the person is, comment. If they are a registered Research Analyst or Investment Adviser, they’ll have guidelines on how transparent they need to be. If they’re an unknown source, there is no accountability. Some will also try to tell you how much they have in a company whilst being registered. If they don’t, be wary.
You can view who qualifies as a known intermediary via the Securities and Exchange Board of India. It should take no longer than a few minutes to check who someone really is. Be extra careful if they’re part of a paid group claiming insider info or operator tips. These are generally linked to illegal activity and could land you in trouble with regulators.
Reliable sources.
The best place to find reliable facts is company documentation on the stock exchange, such as their audited accounts, annual reports and presentations. If they’re claiming the company has landed a Major Contract, check to see if they’ve announced the exchange. If none, you know what they’re saying is not confirmed.
Look at the numbers. See how their sales, profit, debt and cashflow looked over a few years. See how much the promoters have sold / increased their shares. Are there any pledged shares?Whilst this may seem to take longer, it is the safest way to protect yourself from misinformation.
Use the numbers.
Whilst looking at the price and volume can be very useful in confirming or dismissing any narrative, low volume rallies in small stocks can often be caused by a small group of people. This can cause swift reversals. Breakouts with mass participation and healthy delivery volumes are usually much more realistic.
No strategy is regularly perfect. Use price as one of your inputs. Combine this with how their business is performing and valuing. If they’re up 100% but earnings are static…why?
Watch out for bias.
There are many ways hype can be so successful. Confirmation bias (looking for information to confirm our existing beliefs), Herd mentality (feeling safer knowing lots of other people are doing the same) and Recency bias (assuming the latest results will continue forever). Plus, feeling over confident with a few wins may cause us to increase our risk.
Avoid these negative biases by writing down why you think something will happen. Think about at least 3 ways it may not work. Wait a day before making any non urgent decisions. Often taking a short break will show you flaws which you weren’t seeing due to the hype.
Choose to follow a few reliable sources. Research on the stock exchange, regulator documents, reputable financial papers and company management comments. Try to limit how much you look at social media sites which encourage hype. Un-follow any groups trying to get you to follow them daily without giving any reason.
Quality over quantity. Usually a hour reading 1 annual report will be more valuable than a whole day reading peoples opinions.
Beware of scams.
Be aware of bogus trading apps. Don’t follow Advisors who pretend to be famous. Don’t accept any offers of high returns. Never give out your passwords, one off codes or banking details. Only use official apps from reputable sources. Alert your broker and any authorities if you spot anything suspicious.
If it sounds too good, it probably is!
Final Thoughts
There will always be noise within the market. And probably more of it. But getting into the habit of checking things, being humble and focusing on improving your skills in the long term will help you the most.