Benchmark indices saw massive selling pressure in trade this week. Several bluechip stocks, including those which had come out with their IPOs saw massive selling pressure. Here are 10 high quality stocks that dropped to their 52-week lows this week.
Stocks at 52 week lows
|Name of company||52-week low price||Current market price|
|LIC Housing Finance||330||342|
|SBI Cards and Payments||781||850|
Should you buy these stocks at 52-week lows?
Some of the stocks that are in the list are very high quality names, including FMCG stocks and new tech stocks. The problem for tech stocks like Zomato and Policy Bazaar is that they are still high prices to pay for these stocks. Globally, there has been a craze for tech stocks, which resulted in heightened buying. We believe that these stocks are still high priced and investors can avoid buying them.
LIC Housing has seen its quarterly financial performance deteriorating over the quarters. Unless, the next few quarters see an improvement, we do not recommend buying the same. Castrol India is a good stock to own as the dividend yield on the stock itself is more than 4%. Some FMCG players like Colgate have hit by high cost of inputs. In any case, they maybe attractive at these levels to buy for long term investors.
The problem for the markets?
The real problem for the markets is that valuations have become extreme. Companies that are loss making are commanding valuations that run into millions. IPOs are raising money at any and every price. At such time it becomes important to be cautious and buy into good quality stocks that are profit making and paying dividend for many years now. We believe that Castrol India and Aurobindo Pharma have the potential to generate good returns in the long term.
As far as the markets are concerned we believe that volatility is here to stay.
Global cues, quarterly results and the upcoming Union budget would be some of the key factors driving the market direction in the near term. So, investors need to be cautious before investing.
Investing in equities is risky and investors must therefore understand the risk. The author and Greynium Information Technologies Pvt Ltd would not be responsible for any losses caused based on the article. The author and is family do not hold shares in any of the companies mentioned above.