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Prakash Industries Breaches Stop Loss Limit: Sell or Stay Put? - Views on News from Equitymaster

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  • Mar 6, 2018 - Prakash Industries Breaches Stop Loss Limit: Sell or Stay Put?

Prakash Industries Breaches Stop Loss Limit: Sell or Stay Put?
Mar 6, 2018

Prakash Industries Ltd, one of our open positions in Profit Velocity, closed more than 4% down today.

We had recommended the stock at Rs 238 on 24th January.

The momentum for the stock has been weak lately. It has been witnessing selling pressure and has lost more than 17% during the past few trading sessions.

Owing to the above correction, the stock has also been the latest casualty of our insistence of a stop loss.

As you are all aware, one of the pre-defined sell criteria we have in place for Profit Velocity recommendations is the concept of stop loss.

The stop loss limit for PV stocks is in the region of 15%-20% of the recommended price.

In other words, if a stock has been recommended at Rs 100, we recommend the subscribers to consider exiting on most occasions at a price no lower than Rs 85.

As of today's closing price, Prakash Industries Ltd has breached its stop loss limit.

The stock is down 23% from its recommended price of Rs 238.

Since the stock has hit its stop loss limit, we would recommend subscribers to consider exiting Prakash Industries at the current price of Rs 182 per share.

We accordingly give a SELL on Prakash Industries Ltd and close the position.

From a point to point basis, the exit would translate into a loss of 23%.

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