How to Guess if a Stock Will Go Up or Down
A Simple Guide for Everyday Investors
Every investor wonders:
“Will this stock go up or down?”
The truth is, no one can know for sure. But if we look at certain market trends and company facts, we can make a more informed guess.
At SS Galaxy Pathshala, we use a mix of big investor activity and fair price checks to understand where a stock might be headed.
1. How Big Investors Affect the Market
In India, the stock market is influenced the most by three types of big investors:
FPI – Foreign Portfolio Investors (investors from outside India who invest in stocks, bonds, etc.)
FII – Foreign Institutional Investors (big foreign funds and institutions)
DII – Domestic Institutional Investors (Indian mutual funds, banks, insurance companies, etc.)
Everyone else — people like you and me — are called retail investors.
Here’s the simple rule:
If FPIs, FIIs, and DIIs are buying, the market usually goes up.
If they are selling, the market usually falls.
Example – The 2008 Crash
In 2008–2009, during the global financial crisis, FIIs and DIIs sold a lot of shares. This made the Nifty 50 index drop from around 5,100 points to 2,760 points — a fall of nearly 46%.
Note: You can check daily buying and selling data of FPIs, FIIs, and DIIs on the NSE website. If they are buying, it’s a positive sign for the market.
2. Why Fair Price Matters
Just because big investors are buying doesn’t mean you should buy any stock blindly.
Sometimes, a stock can be overpriced — meaning it’s selling for more than it’s really worth. When that happens, prices often drop later (this drop is called a correction).
That’s why we also look at the fair price of a stock.
If the market price is below fair price → Stock might be undervalued and could go up.
If the market price is above fair price → Stock might be overvalued and could fall.
3. Two Simple Ways to Guess Stock Trends
Method 1 – Check the Fair Price
By looking at a company’s profits, growth, and financial health, we can estimate what its fair price should be.
Overall strong fundamentals.
Intrinsic Value – Helps compare current price with fair price.
Method 2 – Use the P/E × EPS Formula
This is a beginner-friendly way to estimate future stock prices.
What Should You Do as an Investor?
Keep an eye on RBI’s interest rate decisions
Invest in assets that beat inflation — like stocks, mutual funds, gold, etc.
Avoid holding too much cash for long periods
Learn how economic cycles work — don’t just follow tips
Formula:
Future Price = Future P/E × Future EPS
Steps:
Find the average P/E ratio from the past 3 years.
Estimate EPS growth for the next 3 years.
Multiply them to get a possible future price.
This can help you see if the stock has room to grow.
- Putting It All Together
To make a better guess about whether a stock will rise or fall:
Check if FPIs, FIIs, and DIIs are buying or selling.
ind out if the stock is undervalued or overpriced.
Look at the company’s financial health and growth.
If big investors are buying and the stock is undervalued with strong growth, it has a better chance of going up.
Disclaimer:
This guide is for learning purposes only. The stock market is unpredictable, and no method can guarantee profits. Always do your own research or take advice from a SEBI-registered financial advisor before investing.
