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Is Ruchira Papers Ripe for Booking Profits? - Views on News from Equitymaster
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Is Ruchira Papers Ripe for Booking Profits?
May 29, 2017

Ruchira Papers, one of the recommendations under Profit Velocity (PV), is up 23% since recommendation.

As you are all aware, we have a trailing stop loss in place for Profit Velocity recommendations.

It's a pretty simple concept.

With a trailing stop loss, we raise our selling price every time the stock goes higher.

Say one buys a stock at Rs 100 per share and sets the trailing stop at 20%. If the stock rises to Rs 160 per share, one would sell on a decline back to Rs 128 (20% of Rs 160 is Rs 32. One subtracts that Rs 32 from the 160 high to determine a Rs 128 stop price).

For PV stocks, the trailing stop loss is in the region of 15%-20%.

A Pre-emptive Measure

Has it been hit in the case of Ruchira Papers? No. The stock is still some distance away from its trailing stop loss of 15%, taken on its highest closing price of Rs 178 since our recommendation.

The stock is down some 10% from the highest closing price of Rs 178.

Still, we would recommend subscribers to consider exiting Ruchira Papers at the current price of Rs 160 per share.

This, we are doing because of two reasons. One, if we wait for the trailing stop loss to get triggered, it will take the potential gains from the stock to below 20%.

And we are of the view that a stock that goes up at least 35%-40% from its recommended price, which did happen in the case of Ruchira Papers, it should be closed at a gain of minimum 20% if not more.

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RUCHIRA PAPERS SHARE PRICE


Dec 15, 2017 (Close)

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