BLOG MEANT FOR 24 AUGUST 2018 Friday
Markets traded in a narrow range throughout the day today. Nifty closed 12 points higher at 11583. European markets have closed negatively and US markets are flat tonight.
It is likely that our markets may be slightly weak tomorrow too.
Nifty index is in Hold Zone.
The indications for individual stocks for short term only are –
HOLD ZONE –INFOSYS, RELIANCE INDUSTRIES, ITC, AXIS BANK, SBI, TITAN, TCS, M&M, HINDALCO, YES BANK
DON’T BUY ZONE – HDFC, HDFC BANK, MARUTI, ASIAN PAINTS
SELL ZONE – VEDANTA (it has fallen due to general market nervousness and weakness)
L&T company has announced a buyback of its shares from shareholders at Rs.1500 per share. The current price is around Rs.1352.
This means that L&T is having excess funds in its accounts and thinks that instead of keeping it as it is with the company, it is better to pay it back to shareholders who may use for their personal requirements etc.
In such cases, when a company buybacks its own shares, as shareholders of L&T we have two choices:
- Sell back the shares we hold to the company and receive Rs.1500 per share in return
- Continue to hold the shares as initially decided for long term and ignore the buyback offer from the company.
Please note that the company will not buyback all the shares that you hold. For example, you may be holding 40 shares of L&T. Depending on the number of shareholders who have applied for the buyback, the company may decide to buy a portion of the shares of each investor. Hence, they may buy 15-20-25 shares out of 40 held by you and all shares will not be purchased.
If you are a long term investor who is looking for good appreciation over the years, then you can continue to hold L&T shares and you need not sell it back to the company.
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Dr.Bharath Chandra and Rohan
(The above comments are only the personal views of the authors of this blog. Please do your own research before taking any investment decisions. The reader of this blog must understand and take full responsibility for the profit or loss made by taking actions based on the above views)