7 Best Stock Market Books by Indian Authors

Are you hunting high and low for the best stock market books by Indian authors that will give a detailed snapshot of every nook and corner of the Indian stock market?

No matter what your profession is and how intelligent you are, when you want to try your luck in the world of investing and make a profit from the stock market and you haven’t understood the ins and outs of the stock market, then you will definitely lose money alike Sir Isaac Newton who lost around $3 million [estimated value in 2002-03].

To make money in the Indian stock market all you need to do is to read the best books about Indian stock market to learn the basics of investing and stay invested in the long run to reap the profits.

7 Best Stock Market Books by Indian Authors

Let’s dive into this upside-down blog post where you will find the 7 best books to read to understand the Indian stock market.

‘How to Avoid Loss and Earn Consistently in the Stock Market’ by Prasenjit Paul

When you are a newbie and want to invest money with a long-term horizon then this is a must-read book. This book offers the parameters that you should check before investing and how to build a stock portfolio that will multiply your investment without taking too much risk.

Why isn’t the stock market risky?

Irrespective of your purchasing be it a vehicle, real estate property, or stocks, the author has advised that a retail investor should perform upside-down research before investing in it. The stock market is risky for those investors who:

  • Follow blindly the ‘Multibager stock picks’ that they have received on their email or smartphone.
  • Don’t invest in quality stocks for the long run, instead, try their luck in options or futures even when they don’t have the basic idea about ‘put’ or ‘call’.
  • Take a loan from the financial institutions and invest the money to make some quick bucks.


Mistakes You Should Avoid while Investing in the stock market

What is the first step of picking winning stocks?

No matter what is the current share price of a stock, or what is the market capitalization of the company, before investing in any company do consider the following parameters.

Is the company debt-free or has a marginal debt burden? As an intelligent investor pick a stock that either is debt-free or has a marginal debt of less than 1.

Is the company’s ROE between 12% and 15%? As a good rule of thumb, invest in those stocks that have delivered a 15% ROE for the past 5 years and stay clear from those companies that are much lower below 12% ROE for the same time frame.

How to evaluate the efficiency of the company?

It’s a better idea to avoid those companies that are operating in the hottest industries with an average management team when compared to those companies with efficient management. You can assume management is efficient enough and quite successful when:

  • The promoters of the company increase their stake in the company via a block deal or the company announces the share buyback.
  • Foreign Institutional Investor has a significant presence in the shareholding pattern.
  • To raise funds the company’s promoters haven’t pledged their equity shares.
  • The company has a track record of paying dividends to the shareholders regularly.


Why should you look at valuations?

No matter what items you are shopping be it a smartphone or a share of a company, if you are paying a too much higher amount to own stuff, all of your efforts will end in smoke. That’s why the author has delivered a set of valuation matrices that you should check before investing since the share price is only a number.

Parameter #1. Price to Earnings Ratio

One individual can easily calculate the P/E Ratio once the market value per share is divided with its earnings per share for a financial year.

how to calculate Price to Earnings Ratio

Simply put, the price-to-earnings ratio reveals the time it will take to get back your investment from the ongoing profits made by the company each financial year.

Start screening the sectors and shortlist those stocks that are fundamentally intact, but are trading much lower when compared to the sector’s P/E.

As a good rule of thumb, invest in those stocks of which the P/E is trading in the lower band when compared to their last 5 years average.

Parameter #2. PEG Ratio

Contrary to the P/E ratio that doesn’t take the future expected growth rate into consideration, the PEG Ratio is quite a handy matrix that will reveal whether the stock is undervalued or overvalued as clear as the sky is blue.

One individual can easily calculate the PEG Ratio once the P/E ratio is divided with its projected growth rate.

how to calculate PEG Ratio of a company

As a good rule of thumb, the lower the PEG ratio is, the better the stock is for the investment for the long run. First, check out the fundamentals of the company and invest accordingly when the company’s PEG ratio varies between 0.5 and 1. Plus, when you have found a company with P/E ratio and PEG ratio identical and is 1, then the chances are higher that the stock is reasonably valued. The author has advised that one can steer clear from investing in those stocks with a PEG ratio higher than 2.

When to buy a stock and when to sell a stock?

No matter what is your background or education, to make money in the stock market there’s no need for an MBA degree either. All you have to do is to pick quality businesses that are trading much lower than their underlying business and stay invested for the long run. That’s all you have to do to reap the best plausible returns.

It’s not a good idea to buy a stock simply because the stock has witnessed a sharp correction and it’s trading at 10 as compared to its lifetime high of 100.

Don’t be a fool. When the stocks constantly corrode than it’s previous trading session, there must be a reason for that such as bankruptcy issues, promoter scams, and counting. Simply put, don’t invest in stock simply because it’s trading at a 60% discount than its lifetime high.

What are the Do’s and Don’ts to avoid loss in the stock market?

According to the author, don’t check the share price each trading session. Instead check out the management news, quarterly results, annual results and stay invested for the long run if the earning numbers are satisfactory. Plus, don’t sell a stock since the stock has experienced a sharp correction of 25% from its lifetime high. Instead, check out the numbers as the stock market is a voting machine in the short run, but a weighing machine in the long run.

How to construct a stock portfolio?

Diversification is the key when it’s time to invest in the stock market. But over-diversification can result that all of your efforts may end in smoke. Don’t include around 50 or 60 stocks in your portfolio. It is impossible to track the earnings results of all the stocks. As a good rule of thumb, after checking the fundamentals and valuation include only 10 to 15 stocks in your portfolio. When you have only 15 stocks in your portfolio you can track the quarterly or annual results and can take quick decisions accordingly.

Finally, the author has delivered a quick formula that allows a retail investor to filter quality 15 to 20 stocks across 5000+ stocks that are listed in the Indian stock market.

‘Stocks to Riches: Insights on Investor Behaviour’ by Parag Parikh

You will find an ample number of best books to read about stock market in India, but a fewer number of books are on the behavioral side of investing.

This book assists an investor in many ways be it to decide when to buy or sell a stock, or which stocks to include in your portfolio and in what ratio, and counting. The biggest takeaway of this book is that you will learn not only how emotions and cognitive errors can affect your financial decision but also how to get rid of decision paralysis.

Let’s dive into it.

How to deal with loss aversion?

Be it poker or basketball, no one wants to lose. Investing is no exception. The author has stated that the investors are more scared of loss in comparison to risk. For example, an investor buys 100 shares of a company at the trading price of ₹100. In the scenario of when an investor sells the stock at ₹150, he will be less happy when compared to the pain if he can sell the stock for ₹50. The loss aversion pushes a retail investor to book profit early and hold stock even if it’s corrected 50% as compared to the buying price.

That’s why usually the investors invest heavily in debt securities or FDs, knowing the fact that the inflation and taxes will bite a significant amount.

How Sunk cost fallacy can affect your investment decisions?

The sunk cost fallacy leads a person to stay invested in any stock, or buy more when the share witnesses sharp correction to justify the past action when they’ve invested capital in that particular stock.

Let’s make it clear with the following example.

Suppose you have bought 100 shares of any company at 100, and after three years when the stock is trading at 80, instead of selling it you are buying more stocks for averaging. Since the investor still thinks that the stock is undervalued and stays invested for the past 3 years, a retail investor assumes that it will deliver superior returns in the long run. A retail investor buys more to justify his past action to buy 100 shares.

How Decision Paralysis can affect your investment decisions?

When you are investing in the stock market with a long-term horizon, then you need to make decisions once in a quarter or once a year. These investing decisions will decide if we can make money from the stock market and how much we can make money by investing in stocks.

It’s an onerous task when to make a decision and when to maintain a status quo. For example, during the bull market, the stocks with the worst fundamentals and deteriorating earnings can increase by leaps and bounds. But when the market is in the grip of the bears then the majority of the intelligent investors sell their stocks when they deemed fit.

When you hesitate to make any decision owing to an inherent fear of going wrong, the chances of losing the invested capital, or are unwilling to take investing risks, then the chances are higher that you are in the vicious circle of decision paralysis.

How to tackle decision paralysis?

Here are the few strategies that the author has delivered in this book to deal with Decision Paralysis.

Don’t take too many decisions in a week – When you are investing in the stock market with a long-term view then you don’t need to make a decision once a week. Instead, check the quarterly results and annual results and take decisions accordingly.

Calculate your potential loss – No matter what capital you have invested in debt, bonds, or gold and stay clear from the equity market, do consider the potential loss by not investing in the stock market in the long run.

Apply Dale Carnegie principle – When you assume the worst outcome, then the chances are higher that this will help you to not only hold your nerves when there’s a sharp correction in the stock market but also take decisions that suit the need of the hour.

How does mental accounting affect investment decisions?

Mental accounting bias leads an individual to take an irrational decision. Usually when a person’s bank account is credited with a tidy sum then he divides the money into various pockets and spends accordingly.

Let’s make it clear with an example.

Suppose your bank account is credited with $1000. When you have got this capital in your bank account then mental accounting allows you to create different pockets regarding what to do with this money including one-night dinner at a restaurant, purchase of utility goods, stock market investing, and counting.

How to tackle mental accounting bias?

Without wasting any time you should invest $1000 in the stock market that will help you to achieve your long-term goals.

‘Value Investing And Behavioral Finance: Insights Into Indian Stock Market Realities’ by Parag Parikh

This book is a goldmine for value investors that cover crucial fundamental concepts by taking examples of Indian stocks solely. When you are in a witch hunt for a book that will help you to identify great companies with efficient management that are trading much lower than their underlying values, then this book is a must-read.

How to understand the behavioral trends?

No matter what type of investor you are, be it a value investor or a growth investor, the author brings into consideration the two components of returns.

The fundamentals take into consideration the earnings growth and dividend growth, the speculative part deal with valuation ratios namely the P/E ratio. As an intelligent investor, the author advises you should stay clear from ‘Noise’ in the stock market and stick to fundamentally sound companies that are available than their underlying values.

What are the behavioral obstacles to value investing?

Redency Effect – Here an individual investor gives greater weight to recent information at the cost of older, but relevant information.

Prospect Theory – Where retail investors take loss aversion at face value over profits that result in holding the loss-making stocks and selling of stocks that deliver a steady and satisfactory return that they have in their stock portfolio.

Instant Gratification – Where they don’t have the patience to stay invested in the long run.

Plus, since it’s a complex process to find the undervalued stocks, the retail investors fall back on various heuristics namely P/E heuristics, P/B heuristics, and P/S heuristics.

How to become a contrarian investor?

A contrarian investor in search of superior returns often goes against the consensual opinion that is wrong. But here are the obstacles that will restrain a retail investor to become a contrarian investor:

Group Thinking – Where a retail investor sacrifices his thought to be in line with a group of investors without thinking deeply about any alternatives or consequences.

False Consensus Effect – Where a retail investor tends to follow what the majority of the investors will do, no matter what parameters they check before investing in that stock, or how this will affect the returns in the long run.

Buyer’s remorse – Where a retail investor tends to regret any investing decision if the decision differs in the short run.

Ambiguity Effect – Where a retail investor relies on known outcomes rather than unknown outcomes that lead to hesitation when it’s time to make investing decisions.

Confirmation Trap – When a retail investor tends to seek the investment decision of others for confirmation of an investing decision.

By giving various case studies the author confirms that contrarian investing has outperformed conventional investing by far and away.

What is Growth Trap and how does it affect your investment decisions?

A majority of the investors lead themselves in a growth trap when a retail investor pays a higher price for a growth stock.

Here are the factors that can lead an investor to be caught in a growth trap:

Availability Heuristics – Where every investor talks about any specific stock and you invest in no time.

Over-confidence bias – This leads an investor to overestimate his investing knowledge and start investing in stock despite deteriorating earnings.

Bystander Effect – No matter what the price of the stock is, still the stock may be overvalued or undervalued. When you know that despite the higher trading price, the stock is still trading much lower than its underlying values, the Bystander effect doesn’t allow you to buy the stock or buy more if the stock is already in your portfolio.

Information Cascade – It is a situation when a retail investor follows the buy or sell call of experts, without doing any upside-down research.

Halo Effect – When you make decisions solely based on positive experiences.

To disclose the effect of the growth trap, the author illustrates this by offering multiple examples.

For example, if you invested 100000 in both ACC and Century textiles back in 1979 then ACC would yield 4 crores more return when compared to Century textiles even though century textiles were a growth company. This is because the investors have paid a higher price to own the shares of Century textiles.

How to kick start investing journey in commodities?

The author has outlined why you should invest in commodities and why commodity is the safest bet when invested for the long run.

Why and how to investing in PSUs?

In this chapter, the author explains why retail investors have a perception that PSU stocks are underperformed. Plus, in this section, you will find why you should invest in some of the PSU companies namely SBI, or Oil marketing companies.

How to master yourself in sector investing?

Here the author shares insights on how representative heuristic, herding, overconfidence, winner’s curse, can lead to losses and the right time to sell the sectoral stocks. Here the author has analyzed not only past performance but also future expectations of sectors including, automobile, banking, FMCG, real estate, telecommunications, and counting.

Should you invest in IPOs?

The majority of the investors often use ‘Singular Information’ rather than ‘Base Information’. As an intelligent investor, don’t bid for an IPO solely based on ‘singular information’.

Plus, here the author reiterates how Winner’s Curse leads the author for applying to the IPO of Orient Green where he lost his invested capital significantly. In this chapter, you will find various case studies regarding the IPOs and their performance since 1990.

How to get started in Index Investing?

Unlike the corporation where the company focuses on consistent earnings growth, the indexes scan any specific sector and include the emerging corporation, and exclude the stocks the performance of which is deteriorating.

The biggest drawback of index investing is that since the index includes stocks in line with market capitalization, the chances are higher that companies with the worst fundamentals enter the index through the medium of market capitalization.

The author has performed a study where he adds the new entrants in a portfolio and on the flip side, he adds the rejected stocks and starts investing equal amounts. The result is quite shocking where the rejects have outperformed far and wide when compared to new entrants.

How to avoid Bubble Trap?

The author has discussed four key points that every investor should consider before investing in the stock market to avoid loss heavily. Back in 2008, there a bubble was formed when the real GDP growth was between 6% and 9%. Initially, the investors reap gains. This news was circulated and there was a flow in the stock market, and in turn, not only the share prices but also the valuations got increased by leaps and bounds. Once the big guns and FIIs found that the P/E level was insanely expensive, they started selling, and the bubble burst.

So, before investing in the stock market conduct research of sector or sector-specific stocks to gauge the valuation and stay invested in the long run to reap the benefits.

‘Fundamental Analysis for Investors: How to Make Consistent, Long-term Profits in the Stock Market’ by Raghu Palat

Your nature of investing does not matter, a value investor or a growth investor when you are in a witch hunt to learn how to make profits in the stock market steadily and consistently without taking too much risk, then this is a must-read book for every individual Indian investor.

Raghu Palat, a banker by profession who has worked in various multinational banks across Asia, Africa, American, and Europe will give you a detailed snapshot of how you will pick a stock that will yield steady returns over a long term horizon.

Fundamental analysis allows a retail investor to analyze a company taking into account the Quantitive and Qualitative factors and decide accordingly whether the company lives up to the fundamentals to invest in, or not.

What is a Quantitive analysis of stock?

Qualitative factors can be described in numbers such as the revenue growth or the sales growth when compared to the previous financial year, and counting.

Quantitive analysis of stock includes the following items into consideration:

  • Revenue Growth,
  • Profit Growth,
  • Free cash flow,
  • Earnings per Share,
  • Dividend payout,


What is a Qualitative analysis of stock?

Since the qualitative factors gauge the soft matrices of the corporation, that’s why it’s hard to interpret the soft matrices of the company into numbers. Let’s take a deep dive.

Is the management of the company up to the mark?

Whether the management of the company is managing the business efficiently and is the management utilizing not only the shareholders’ capital but also the available assets to generate more profits.

What products are offering?

By analyzing the product section you will have a clear idea of what product or services the company is offering and how they beat the peer competition and allow themselves to enjoy a sustainable competitive advantage.

In this book, the author hasn’t given any secret formula or tips that allow a retail investor to make some quick bucks. Instead, this book assists an investor to find whether the stock is trading much lower than its intrinsic value that allows an investor to make a profit steadily and consistently over a long-term horizon.

‘The Dhandho Investor: The Low-Risk Value Method to High Returns’ by Mohnish Pabrai

A majority of the investors find that risk and return on investment are proportional, but it is not true. Value investors namely Benjamin Graham, Warren Buffet, Joel Greenblatt have shown how to achieve whopping returns without taking too much risk. The author of this book, by offering various case studies will reveal the secret of how your investment returns can increase by leaps and bounds without taking too much risk.

The author is a managing partner of Pabrai Investment Funds that has delivered a whopping 28% annualized return on investment since its inception in 1999. Simply put, if you had invested $100000 in the fund in 1999, then your portfolio worth would have been a whopping $659000 in 2006.

But how has he made this happen?

This book will give you the Dhandho framework that is the timely tested 9 core principles that allow the investor to achieve the best plausible returns on investment.

Principle #1. Focus on buying an existing business

When you are investing in the stock market don’t invest in new entrants or an unproven startup, instead, stick to the quality business with a proven track record.

Principle #2. Invest in simple businesses

It’s a wise decision to invest in simple businesses that will still relevant even after 100 years since the people need them and the chances are higher that everyone will buy the product or services even after 100 years.

For example, do you know the fate of Facebook, or Twitter after 50 years?

But when you are investing in auto stocks or pharma stocks then it’s easier to tackle the emotional stress to hold the stock. Plus, if you fail to explain the business model or how the company generates profit in a single paper, then you should avoid that kind of business and instead find a simple business that you have complete know-how.

Principle #3. Invest in distressed businesses

Since human psychology affects the stock market to a larger extend, conduct a witch hunt for a simple business that is under distress since you will find distressed stocks are available at an attractive valuation. When you find it, start investing in it to enjoy the superior returns as compared to the hottest industries.

Principle #4. Invest in business with durable moats

Search those simple businesses that are enjoying a sustainable competitive advantage over peer competitors and start investing to witness a steady return in the long run.

Principle #5. Few bets, big bets, and infrequent bets

When you find any mispriced opportunity then invest heavily to reap the benefits. All of your efforts will end in smoke when you include 100 stocks and expect above-average returns.

Principle #6. Fixate on arbitrage

Arbitrage allows an investor to make a high return on invested capital without taking too much risk. When you have a clear idea to which extend the company will enjoy a competitive moat and when they will disappear, then the chances are higher that you can make a big buck in the market.

Principle #7. Margin of safety always

No matter what is the price of a stock, always search for those stocks that are trading much lower than their intrinsic value. Invest in those stocks that are available at a significant margin of safety.

Principle #8. Invest in low-risk, high-uncertainty businesses

Risk and uncertainty are the two sides of the same coin that aren’t the same. Risk is where you can lose your invested capital while uncertainty focuses on the likelihood of outcome for a given scenario.

Where low-risk, low-uncertainty businesses are trading at higher valuations, you will find the low-risk, high-uncertainty business at attractive valuations if the market fails to calculate the underlying values of the company.

Principle #9. Invest in the copycats rather than the innovators

It’s an onerous task to find those companies that are innovative and then investing. Therefore, you should conduct a witch hunt for those copycat companies that are capable of lifting and scaling themselves in line with the innovators.

Finally, when you have included a few numbers of a quality business, start investing early and stay invested for a time frame between 2 and 3 years.

‘Investing in India: A Value Investor’s Guide to the Biggest Untapped Opportunity in the World’ by Rahul Saraogi

Since there are 5000+ listed companies on the Indian stock market, if you haven’t performed upside-down research then the chances are higher that you will fall into a value trap.

The author, Rahul Saraogi, in this book, has given insights into the Indian stock market through various case studies that will lead a retail investor to what to look for before investing in any company.

Since India is the go-to-market for foreign institutional investors owing to the immense economic growth, no matter what you are a foreign investor or Indian national, you must have a deep understanding of not only what is the history and culture of India but also how they impact the investment climate of India if you bark up the wrong tree then the decision plays havoc.

In this book, the author brings 5 parameters that play a pivotal role when it’s time to decide whether the stock is worth investing in.

The five filters the author makes use of are:

Corporate Governance – Invest in those companies that not only treat the minority shareholders like big guns but also safeguard the interest of minority shareholders of the company.

Capital Allocation – No matter how big a corporation is, stay clear from investing in those companies that aren’t fighting tooth and nail to maximize returns on capital. It’s worth considering whether the company takes loans to expand its business or not for the sake of growth. If the company has a significant debt burden then it’s a good idea to stay clear from these companies since the excessive debt burden plays havoc in the long run.

Business Fundamentals – Fundamentals reveal that by applying what strategies the business makes the profit from the shareholders’ capital and who the customers are of the company, etc.

Financial Strength – To gauge the financial strength you should take a look at revenue, profitability, assets, liabilities, etc.

Relative Opportunity – After creating a stock portfolio across various sectors, check the quarterly or annual results of the companies that you have and the peer companies too. If you find a stock that fulfills the above parameters then you should include it in your stock portfolio.

No matter whether you are an Indian national or a foreign investor who is looking for investing in the stock market, this book is a goldmine. This book gives detailed insights into Government, politics, media, financial architecture, Indian economy, etc. that will help you to understand India the best plausible way.

‘Bulls, Bears, and Other Beasts’ by Santosh Nair

This book will give a detailed snapshot from the Harshad Mehta scam to the Khetan Parekh scam, Mesco shoe scandal, and counting. The author brings a fictional character namely Lalchand Gupta who has been witnessing each and every event since 1988, be it the creation of SEBI or entry of NSE, blockbuster IPOs, humdrum IPOs, etc.

No discussion is complete when you are discussing the Indian stock market without mentioning the Harshad Mehta Scam. The author covers every nook and corner of the Harshad Mehta scam including how Harshad Mehta, the big bull manipulated the market and how the Ponzi scheme that he ran to open results in an upside-down market upheaval.

Plus, this book will give a detailed snapshot of how the NSE came into existence and how NSE has changed the trading ecosystem from soup to nuts to become the top stock exchange surpassing BSE within the 11 months of existence.

When you are a long-term investor then you should read this book at least once. This book will give you a detailed snapshot of what strategies you should apply to reap the benefits of long-term investing in the stock market and what strategies won’t.

What makes this book a must-read is that the author has taken all the major events since 1988, be it the introduction of screen-based trading, or the emerging of algorithmic trading, or to what extend FIIs influenced the Indian stock market, etc. without any technical jargon.

Hope this article will help you to find the best stock market books by Indian authors that will help you to learn the ins and outs of the Indian stock market.

Have I missed any best books on investing in Indian stock market? Feel free to suggest the best book to understand Indian share market if I have missed any and I will add them in this article that will help millions of investors.

If you have enjoyed this blog post feel free to share it with your loved ones and let them allow learning the basics of stock market investing to kick start their investing journey in the Indian stock market.

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