Shekhar Yadav

Jan 9, 20222 min

Randomness in Share Price movements: Case Studies

Updated: Jan 10, 2022

There are certain ways stock prices move. If we understand this aspect of the market, investment becomes easier. I will try to explain this with various cases studies.

Anyway, I am sharing the conclusion/learning here:

  1. There is NO WAY one can predict the future stock price movement.

  2. There is lot of randomness in stock price movement. No news, nothing can determine how the stock is expected to move in the future.

  3. Post the steep rise in stock prices there is a very very long period of consolidation.

  4. Best way to make money in the market : Look for GOOD companies trading at low levels of valuation relative to its actual value and wait for the market to catch it.

  5. When there is a steep and sudden increase in the prices taking the valuation to exorbitant levels, Exiting some part of your holding makes a lot of sense.

  6. If someone buys at the top, he not only has to go through price correction, as well as long period of consolidation causing nothing but frustration.

Case 1: Borosil Renewables Ltd

Borosil Renewables- Historical Stock Prices

Borosil Renewable - Financials

Case 2: Indiamart Intermesh Ltd

Indiamart - Stock price movement

Indiamart - Valuation and Stock Prices

Case 3: P G Electroplast Ltd

P G Electroplast Ltd: Historical Share price movement

P G Electroplast Ltd : Valuation & Share Prices

Case 4: Poly Medicure Ltd

Poly Medicure Ltd- Historical Share prices

Poly Medicure Ltd: Valuation & Share Prices

Case 5: Meghmani Finechem Ltd

Meghmani Finechem- Historical Share Prices

Meghmani Finechem- Valuation & Share price

Caustic Soda Flakes prices

Caustic Soda Lye prices

Other examples would be GMM Pfaudler Ltd, Prince Pipes etc

These are stocks which move in rapid phases of upmove and consolidation.

Conclusion:

  1. There is NO WAY one can predict the future stock movement.

  2. There is lot of randomness in stock price movement. No news, nothing can determine how the stock is expected to move in the future.

  3. When there is a steep and sudden increase in the prices taking the valuation to exorbitant levels, Exiting some part of your holding makes a lot of sense.

  4. Post the steep rise there is a very very long period of consolidation.

  5. Best way to make money in the market : Look for GOOD companies trading at low levels of valuation relative to its actual value and wait for the market to catch it.

  6. If someone buys at the top, he not only have to go through price correction, as well as long period of consolidation creating nothing but frustration.

Then there are companies which move gradually towards the fair valuation.

Case 6: Greenpanel Industries Ltd

Greenpanel Industries Ltd- Share Price

Case 7: Deepak Nitrite Ltd

Deepak NItrite Share price

    4380
    8