A recollection of some horror stories in the past few years in the market.

The stocks which were certified blue chips turning into penny stocks over time.

Please read on:

Market is full of success stories.

Stories of stock prices moving to stratospheric high levels. Some people then come up with stories of an investor going into coma and finally dying and the son inheriting a large number of WIPRO, INFY, RELIANCE or EICHERMOT, type of shares.

I have heard the story hundreds of times.

Maybe there are few people who actually made those kind of gains.

Today, we shall talk about the story that nobody likes to tell.

Old timers will remember the tagline on the advertisements for SHOLAY — one of the most successful Hindi movie —— Greatest Story Ever Told.

Today let us tell —- The Story Never Told

The story of Yes Bank:

Just two years ago it was among the bluest of the blue chips.

Today it is downgraded and down in the dumps. It went out of NIFTY index, out of BANKNIFTY index and finally NSE took it out of Futures & Options segment. The big FIIs have moved out of the stock. Few big banks who were forced to buy the stock by the government are keeping it alive and eternally hopeful retail investors still keep buying it.

Nobody told the investors to get out when it fell to Rs. 250 from Rs. 400 level.

Nobody advised them to exit when it went below Rs. 200.

Experts on TV were still discussing the move back to Rs. 300 and upward when the new CEO came in early in 2019.

Nobody had a clue as to what was cooking.

And if someone knew anything, surely it was never told.

Instead you were told that Rakesh Jhunjhunuwala has bought a stake at Rs. 68.00.

So what?

The journey did not stop there and may continue further.

From Rs. 404 on August 20, 2018, it crashed to Rs. 5.65 on March 06, 2020 and traded at Rs. 13.30 on October 23, 2020.

Jaiprakash Associates:


What stock are we talking about?

Believe me, it was considered as a blue chip in the year 2008.

Then it started losing value.

Experts should have seen the trouble and talked about it. No, that does not happen. They were busy talking about revival and getting back to highs again.

We get this kind of news:

Rakesh Jhunjhunwala buys 3 crore shares in JP Associates; stock price jumps 10%

This gentleman picks up the shares at Rs. 18.37 per share. Few years back he had bought at Rs. 26.00.

Retail investors get lured. They think that big money is always right. To their dismay they find out that path to success is not found by following someone.

This is the stock price two year after the above news:

Rs. 3.75 is what it is today.

Market does not care for anyone.

Nobody talks about this story.

Anil Ambani Group Stocks:

Do not jump at me and tell that these were not blue chip stocks.

They were blue chips before they were not.

It is hard to believe today that Reliance Communications was among the top 10 NIFTY stocks in early 2008.

It is equally hard to believe that Reliance Capital had traded above Rs. 2900 in its heady days.

It is again hard to believe that fall like the one in Reliance Power is actually possible.

Today, these stocks have achieved junk status. People tell you not to touch them. Two years ago, there was no one telling that. Maybe someone was —- only that happened to be yours truly. But I am no expert.

Have a look for yourself as to how the mighty have fallen:

Reliance Capital:

Reliance Power:

This was the stock with the most oversubscribed IPO ever till 2008.

It made a low of Rs. 1.00 this year.

Draw your own conclusions about the wealth destruction.

Reliance Communication:

Those who ask the kind of question —- The stock is down to Rs. 50 from Rs. 200. How much further can it fall?

They will find their answer in this stock.

From Rs. 844.70 to Rs. 0.50.

Need another horror story.

Himachal Futuristics:

Another forgotten name.

It was a darling of the investors in the dotcom boom days of 1999–2000.

The stock saw its heady days before the dotcom bubble burst. It made its low in October 2008 and since then it is a stock that goes nowhere. Public memory is short. Specially about such stories of failure.

Let us see how spectacular the failure was:

From Rs. 2578 to Rs. 5.95.

These were some horror stories.

There are more but theme is the same, so numbers will not change the message.

To Summarize:

What no one tell you about blue chips is that they do not remain like that forever.

Technology changes, poor management, fraud and public perception can make even the brightest of the blues to lose their sheen.

In these stocks, chips have fallen and investors have been having the blues looking at their loss.

One has to exit at the first sign of trouble and not get deluded by one big investor buying a stake in the company.

We know that SBI bought stake in Kingfisher Airlines and Reliance Communications. That did not stop the stocks becoming worthless.

There is a lesson to be learnt from such stories. Let us learn that.

Thanks for reading.

Pramod Kumar’s answer to What types of stocks do you avoid investing in, and why?

Pramod Kumar’s answer to Which are some fancy stocks not to buy in 2020 for a longer term?

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