Should You Hold or Sell Sarveshwar Food Shares Amid Losses?
Investing in the stock market is a journey filled with fluctuating prices and market sentiments. When you find yourself in a position where you hold a loss, such as the recent case of 500 shares of Sarveshwar Food Limited, the question often arises: should you hold or sell? The decision largely depends on your investment approach and the current market trend.
Understanding Your Investment Approach
When you are a short-term trader, following a strict stop loss theory is advisable. However, for long-term investors, patience and a strategic approach are key. A stop loss is a predetermined level at which you automatically sell a security to limit a loss or at least cut it down to a more acceptable level. This ensures that losses do not lead to over-liquidation of your portfolio.
Stop Loss Theory Explained
For example, if you initially invest Rs. 1,000, your stop loss line might be set between 999 and 910. But as an investor, rather than focusing on short-term market fluctuations, you should consider waiting patiently and watching for any positive trends.
A practical way to set your stop loss is to put it 1-5-9-12 percentage points below your original investment. For instance, if you bought 500 shares of Sarveshwar Food at Rs. 11, your stop loss might be around Rs. 9.03. However, since your shares are currently priced at Rs. 8.60, it may be wise to stay patient and hold.
The Current Market Dynamics and Sarveshwar Food Limited
As a basmati rice producer, the fortunes of Sarveshwar Food Limited are intricately linked to geopolitical and policy factors. The Indian government has imposed price restrictions on basmati rice exports to protect domestic consumers, which has affected the revenue streams of other rice producers like KRBL. Furthermore, the ongoing geopolitical tensions in GURF countries have impacted demand for basmati rice, leading to a downturn in the industry.
To add to the challenges, the promoters of Sarveshwar Food have reduced their holdings, and foreign institutional investors (FIIs) have also sold a significant portion of their shares. These actions have dampened the spirits of investors and negatively impacted the share price. However, as the situation stabilizes, it is expected that the stock will bounce back.
Historical Performance and Market Sentiment
While historical share prices and performance can provide insights, it is important to consider the broader market sentiment and economic factors. For instance, in the case of companies like Zomato, which also faced initial losses, the market has since shown significant recovery. Although Zomato still trades below its initial purchase price, it has provided a 5x return and continues to grow.
Therefore, holding onto Sarveshwar Food shares might be a prudent choice, given the current market dynamics and the potential for recovery. Patience and a long-term perspective can often lead to positive outcomes in investment.
Final Thoughts
Breath deep, reassess your investment timeline, and consider the broader market trends. If you believe in the long-term viability of Sarveshwar Food, holding onto your shares might be the best strategy. Remember, every investment carries risk, but staying informed and following a disciplined approach can help navigate through challenging times.