Today, the favorite stock of the investor community, L&T, slipped below the psychological Rs.1000-mark on the BSE Sensex. Last time, the share price of this capital goods company had slipped below the 4-figure mark on October 8, in the midst of the 2008-recession.

Thus, if you would have invested in L&T three years back, your money would have yielded your virtually no returns, except for the dividend income earned during the tenure. However, you could have doubled your money if you had sold your positions at the start of November 2010. But, as we all know, timing the market entry/exit is the toughest part of this game.

image

To add to the woes, the capital goods production for October 2011 contracted by 25.5%, indicating significant slowdown and tepid demand scenario in the industry. In fact, the IIP data for the month had witnessed a sharp de-growth by 5.1%, signaling overall slowdown in the Indian economy.

However, to the delight of L&T investors, the company’s outstanding order book size has almost reached Rs.1.5 lakh crore, which is 3.4 times their FY2011 revenue.

[Chart Source]

(Visited 370 time, 1 visit today)

One Response to L&T’s share price fall below Rs.1000 shocks Investors!

  1. Its not only L&T problem. The same problem is with all CG sector.
    With policy paralisys, forign investors lost faith in CG sector. Power plants, steel plants, mining sectors is decelerating. FIIs are seeing no chance to earn money by investing in Indian Capital goods sector. They are moving away to other countries which give better returns. As the % shareholding of CG sector is important one, once they withdraw, all stocks come down whether its L&T or BHEL or PLL or ABB or any company.
    But the positive for future is govt can not remain sleeping over the issue. If this govt can not move, other people who come to power will take action. Once the core sector starts moving, FIIs will come back and stocks go up.
    We have to see for any indication of positive news from govt and then only start aquiring the CG / Banking sector. Until then be on the sidelines.

Leave a reply