NEW DELHI, Sept. 2 -- There was once a miser who, despite having enough money, refused to buy a car for himself. After repeated pleas from his family, he finally gave in and purchased a vehicle. However, he set three conditions for ever taking it out: the weather had to be perfect, the roads had to be empty, and all traffic lights had to be green. The car, of course, never left his garage.

This story mirrors a common mistake in investing. Ideally, an investor should find a stock that meets three basic criteria: the sector is growing, the company is well-managed, and the stock price is cheap. Yet, if you strictly follow this checklist, you'll likely filter out almost the entire Indian market.

The third criterion alone, a cheap price, dis...