Should You Buy 52 Week Low Stocks

The 52-week high and low refers to the highest and lowest market prices of a given security over a 52-week (one year) period.

There are various categories of investors in India and most of them take their investment and trading decisions as to which stock to buy based on their personal instincts without having much knowledge about the stock markets and its basics. And the most popular one is of course is buying 52 week low stocks for short term investing for a period of one to two years or for trading

For Traders

If you ask me seriously, traders must avoid buying 52 week low stocks as the general trend of the stock is downward and all the technical indicators may give a sell signal rather than a buy signal. Secondly, trend is your friend when we study technical analysis. Example: We can see stocks like Kingfisher Airlines, Unitech and Lanco Infratech making new lows every now and then

For Investors

Although, you might feel that the stock is good bet based on stock valuation parameters, but if the market is trending sideways or trending upwards, but still the stock is making new lows, the stock may be making new lows because the fundamentals of the stock might have deteriorated and the stock may trade at low PE multiple in the future because of bleak future prospects of the company. The best examples is Crompton Greaves whose price became half in the week time and never recovered.