When shares reach a 52-week high, should we hold, buy or sell?
- S.K. Bhatia
It entirely depends. There are great companies that are always close to their all-time high. So if you have hit upon any such companies that are on a high, do well, earn more and grow, and have great management focused on growing the earnings, they might be an all-time buy. In between, if you get some opportunity when they are closer to or in between the average of their high-low prices, it might be an opportunity to buy.
But if there is any company you bought with a short-term view and you thought that this thing would happen, and it has gone up, or if you are working on a target, you will have to look at it. However, I think it is not a great idea to do so. If you are a long-term investor in equity, you buy great companies, and you hold it unless the story changes. I don't think a 52-week high or low is a trigger. It could only be one of the things to look at. Now, if you are building your portfolio, then 52-week should be avoided. Buying even great companies at 10-20 per cent lower than 52-week high could be a great idea. But necessarily, selling it at a 52-week high may not be a good idea. This is because great companies may continue to grow substantially, and a 52-week high/low does not matter. Look beyond this numerical point to arrive at a conclusion.