This stock made its buyers poor after making them rich in just 1 year
There is no doubt at all that equity investments fall under a high-return oriented asset class but with no surprise, it can also wash away people's hard earned money in no time. Some stocks give you a handsome return in a quick succession but out of greed, the one who has kept it for even more time must have borne huge losses.
Stock markets are highly risky and volatile in nature, it is popular for its surprises and miracles in no time. There is no doubt at all that equity investments fall under a high-return oriented asset class but with no surprise, it can also wash away people's hard earned money in no time. Some stocks give you a handsome return in a quick succession but out of greed, the one who has kept it for even more time must have borne huge losses.
Executive Director, Choice Broking, Sumeet Bagadia told Zee Business Online "An investor should never listen to anyone with no expertise and look for his\her profit and risk range, during a trade settlement.''
While, Equity Technical Analyst, Simi Bhaumik believes, If the current valuation of a stock is expensive, an investor should book a profit. However, valuations depend on external factors and should be carefully examined.
Firstsource Solutions Ltd, is a software company that provides customised business process management services. It is in the Computers - Software Medium & Small sector with a current market capitalisation stands at Rs 3,354.42 crore.
-Here's simple math explaining how it turned you poor after making you rich:
The stock was trading around Rs 40 in the month of February 2018, where it clicked the lowest mark of Rs 36.75 and hit the highest level of Rs 52.85. The good period of the stock begun in the same month, which doubled in just 5 months and took it to Rs 83.90 in the month of June 2018. The investors who had made an exit here would have almost doubled their investments in less than 5 months. But the one who had kept it held for further recovery would have lost his\her investments back to Rs 47 in another 6 months duration.
Example 1: Mr A invested Rs 1,00,000 to buy 2,430 shares of Firstsource Solutions in February 2018 for Rs 41.15 each and sold them all for Rs 2,01,690 at Rs 83 each in June 2018 with a profit of Rs 1,01,690.
Example 2: Mr B invested Rs 1,00,000 to buy 2,430 shares of Firstsource Solutions in February 2018 for Rs 41.15 each, but after hitting at Rs 83.90, he decided to remain hold for more profits in future to which he lost an opportunity of doubling up his investment as the stock has corrected to Rs 47 in December 2018, almost after one year of purchase.
-Current strategy on the stock according to Simi Bhaumik (expert):
*Major support- Rs 45 to Rs 46
*Target 1- Rs 57, Target 2- Rs 65
*Stoploss- Rs 50
*Fresh buying- Rs 67 (200 DMA) or above
''Current investors can hold the stock, should add more if it crosses Rs 57 levels. The stock might witness short term recovery due to some fundamental factors,'' Bhaumik mentioned.
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-Financials of the company (Consolidated):
The company reported an increase in its year on year (YoY) revenue from Rs 846.38 crores to Rs 944.20 crores, a jump of 11.5 per cent as per its September quarter results. While a 35 per cent improvement in its YOY net profit from Rs 68.76 crores to Rs 92.79 crores for the same period.
Note: Any kind of equity investment is subject to market risk due to its volatile nature. Therefore such decisions require reader's discretion beforehand.
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