Learn From Masters, Avoid 'Falling Knives'
Outlook Money|August 2020
Institutional investors have money, expertise, and information to influence stock prices. Watch them closely to boost your profits
Yagnesh Kansara
Learn From Masters, Avoid 'Falling Knives'

In 84 days during the height of the COVID-19 scare, when the global stock markets had tumbled and remained volatile, one company raised a stupendous ₹152,000 crore. India’s largest private sector company, Reliance Industries, sold almost a third stake in its mobile-Internet venture, Jio Platforms, to 13 institutional investors. These included two strategic partners (Google and Facebook), three sovereign wealth funds of Abu Dhabi, UAE and Saudi Arabia, and eight financial investors.

At the same time, some retail investors tried to chase a category of stocks dubbed as ‘Falling Knife’, which include shares that decline alarmingly in relatively short periods, especially during crises. The rationale to do so is that investors feel that they are hammered way below their intrinsic values and, hence, will bounce back to higher levels in the near future. What such unsuspecting investors don’t realise is that these are exactly the shares that are possibly offloaded by the institutions.

This story is from the August 2020 edition of Outlook Money.

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This story is from the August 2020 edition of Outlook Money.

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