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  • Category: Stock Market

    Whether I should hold or quit the shares


    Have a query about shares? Wondering about the further lucrative course of action? Check out this page for financial advice from experts for all your queries.

    I am a Jharkhand govt employee and going to retire in June-19. Recently I have started thinking of shares and stock markets.
    I have bought last month 4000 shares of GITANJALI GEM @ Rs. 82.01 on my self research and study. Recently this share came suddenly down and todays (19-1-18) price is Rs. 68.40 . Since I am new in this area, I need your opinion that whether I should wait or quit?
    I can wait if waiting would be favorable because today I am suspicious about the behavior of this share.
    Can I get advice?
  • #148084
    Your question is very specific about a company who is in the business of gems and jewellery. From a general point of view, these things are related to fashion and fashion trends and will always have a market. This is one part of the story. The other part is how the particular company is doing presently and what are its revenue and profits.

    As you have done some study in this respect, you must have seen these figures. Now I want to tell you that the share market movements are unpredictable and it is difficult to speculate the future price of a share. If the fundamentals are strong a particular share may be stagnant or down today but in long run, it will strike back and once it is in the bull grip it will start increasing. So a good company share is to be kept for a long time and perturbations in a small time frame are to be ignored.

    Share market is for those who are patient and believe in long-term gain and are not tempted by short-term attractions.

    Generally a shrewd investor will make a portfolio of good shares and even one of them does not meet the expectations the others will compensate for it. We should see the value of our portfolio rather then a particular share. The daily fluctuations of a share are to be ignored and its long time growth should be kept in mind. Please remember in share market you can not make profit on each of your purchases as the companies are highly susceptible to economic conditions and Govt policies and due to this predicting a company future is highly subjective.

    Knowledge is power.

  • #148089
    Presently the share market is having a uptrend and during such times many shares of the companies having sound working results increase.
    Still, there will a few which may not follow the suit. If you have studied about this particular company and you fear that it can go still down further then you can sell it and again pick at a lower value.
    Based on the details available about the company and other news items about it we have to speculate but that may not come true every time.
    There are no hard and fast rules for timing the selling or buying of stocks and individual judgement driven my information plays the crucial role.

    Thoughts exchanged is knowledge gained.

  • #148090
    The one year high and low of Gitanjali Gem are 104.40 and 53.00, respectively, in NSE. Today's maximum and minimum price of this share in NSE are 69.45 and 67.55. The closing price in NSE is 67.75 showing a very marginal increase. It is a small cap company.

    You have purchased 4000 shares @ Rs. 82.01/-. So, it is evident that you purchased the share at higher side. Now, the share is on the downward journey. So, what are the options available to you?

    (a) You can purchase some more shares of the company when it reaches below 63 for averaging and wait patiently for around one year. It can be stated that the script has the potential of reaching at least Rs. 90/- in a year, with some impetus during the budget.
    (b) You can book loss and invest the amount in a good quality mutual fund.

    I would advise you to buy some more shares of the company at the lower range and wait for one year or so, before selling. You will get a marginal profit.

    I would also advise you that if you don't understand share market, then don't invest your valuable retirement corpus in share market by listening to others' advice. Instead invest in a good quality balanced mutual fund and stay invested for five years or more.

    Beware! I question everything and everybody.

  • #148094
    If you look at the 5 year chart of Gitanjali Gems the price has fallend from 650 in april 2013 to 30 rupees in Feb 2016. Then it has slowly picked up.
    From April 2017 to October 2017, its main promoters value fell by 91%. This would have rasied alarm bells in your mind. Apart from Government regulations on gold import, demonetization, the company alos had issues with SEBI.

    So, I would say wait. The market is at the peak and your share is falling. Please follow the daily trend, Every lower circuit equal to a 5% fall, the day you see a reversal in the trend, then you can start averaging. If you can hold on, then don't quit now.

    Lot of people would advise averaging, but don't average in one shot. Start averaging in a step wise manner, you can keep adding in small lots of 10% (400) each time to spread out your risk.

    The other option would be to plan to book a loss ( you would lose around 56-58K), the money you can invest in a MF with a 3-5 year horizon ( longer the horizon, better are the chances of success with equity-based MFs), the loss you have booked can be used to offset any short-term profits you have made in this financial year, you can also carry over the loss to adjust for the next 2-3 years.

    Do you have a portfolio manager, if so then have a chat with him.

  • #148100
    Since you are new in stock markets and investments, I will keep the explanation as simple as possible. You have bought a share of a particular company and its price has fallen. Remember that the value has fallen but not anything from your purse. You still have the share. So before selling you must understand the value of the share. People are very eager and enthusiastic while buying a share but its always disheartening to sell. The reason is, you just need to know when to sell them. Timing is important in stocks.

    I will give you an example:
    If you own a land/plot/house and you ask an agent to evaluate its selling cost. He will come up with a certain amount. Now ask another agent to do the same. He may come up with less than the amount your previous agent has shown. The difference here is the value and you are not losing a dime.

    So think carefully before you sell. You have invested in Gitanjali Gems, different investors may also have invested in that and each of them has a different idea about the value of the company. The most tricky part here is, experienced investors tend to buy undervalued shares. And if the share price has risen substantially then understand it's time to sell. You should also consider the company's valuation. Here are the two cases according to one of the lead financial analyst Danny Cox:
    1. If the company's share price rises significantly without the change in the company's earnings, then the share is overvalued.
    2. If the company's earnings are falling and the share price isn't changed still it is considered as overvalued.

    You should analyze the price-earnings of the stock. A drastic increase in price-earnings indicates its time to sell as there are related risks later on. You can calculate price-earnings by:

    PE = Price divided by earnings per share.

    Analyze PE and you will have a better idea whether to sell or stay.

    Good Luck

    Thank You
    Dr. V. Shashikanth

  • #148105
    I think you have purchased the shares at a wrong time when the price was anyhow. It has crossed Rs.100/- mark also once. I suggest you wait for some time and when the price comes to a low value somewhere around Rs.60/-, you purchase some more shares. Then wait for some more time and then when the rate comes somewhere near the rate initially purchased, then you can sell the total shares of that company so that you will not lose on the shares. The company as such is good and doing good. Many people are recommending the purchase of these shares even now.
    drrao
    always confident

  • #148120
    Dear Umesh Jee, Neeru bhatt Jee ,Partha kansabanil Jee , Natrajan Jee , Dr. V. Shashikanth Jee and Dr. N.V. Sriniwasa Rao jee ,
    Very very thanks to you all regarding clarifying my query in a very detailed and unique manner. My heartily thanks to you all.
    M.D.Singh


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