Do understand that it's different for short term and long term trading.
The above statement mainly applies to long term investments.
5% of 50,000 is Rs. 2500/- which is max you can invest in a stock for long term. So, you can have 20 stocks in your portfolio.
2% of Rs. 50,000 is Rs. 1000/- is the stop loss for each stock for long term.
Now, if you want to do short term trading, then it changes. It's very tough to find 20 stocks at a time that meets the technicals. So, buying a basket of 20 stocks together for short term becomes tough. And, as you reduce the number of stocks, or increase the investment per stock, you will also have to reduce your risk by having a stricter stop loss. You can not afford to lose Rs. 1000 on an Rs. 2500 investment for the short term.
Long term trading is not my cup of tea. Ask yourself, what;'s your risk appetite?