Monday, April 22, 2024
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Stock market’s biggest wealth killer of 2024

In a surprising turn of events, infrastructure stock Sanmit Infra has become one of the biggest wealth destroyers of 2024. The penny stock has plummeted nearly 50% in the current calendar year, leaving investors in shock. From Rs 46.80 in December 2023, the stock has nosedived to Rs 24.93, erasing almost half of investors’ wealth. An investment of Rs 1,00,000 in December last year would have dwindled to a mere Rs 51,230 now.

Steep Declines and Record Lows

The stock’s woes seem unending, with a 9.5% drop in February marking the third consecutive month of losses. This comes on the heels of a massive 42.6% plunge in January and a nearly 36% slump in December 2023. Sanmit Infra hit its 52-week low of Rs 24.05 on February 16, shedding almost 75% from its record high of Rs 94.74 set on July 18, 2023. Over the past year alone, the stock has plummeted by a staggering 64%.

Long-Term Gains vs. Short-Term Pains

While the recent performance of Sanmit Infra has been dismal, the stock has been a multibagger over the long term. In the last 5 years, it has soared by an impressive 780%. This highlights the volatile nature of the stock market, where short-term losses can sometimes overshadow long-term gains.

Market Volatility and Global Factors

The Indian market has witnessed significant volatility in 2024, despite hitting record highs in January. Factors such as hopes of rate cuts, improving inflation, and decent December quarter earnings have kept investors optimistic. However, consistent Foreign Portfolio Investor (FPI) selling, rising US bond yields, and weak global trends have tempered this positivity.

Sanmit Infra’s Business and Earnings

Sanmit Infra Limited is involved in the distribution of petroleum products in India and operates in three segments: Realty and Infrastructure, Petroleum, and Trading. Despite its recent stock performance, the company posted a substantial increase in net profit in the December quarter, surging to Rs 262 lakh from Rs 4.56 lakh in the year-ago period. However, its total revenue from operations declined by over 31% to Rs 21.68 crore from Rs 31.70 crore in the year-ago period.

Conclusion

The case of Sanmit Infra serves as a stark reminder of the volatility and unpredictability of the stock market. While short-term losses can be significant, long-term investors may still find value in fundamentally strong stocks. As always, thorough research and a diversified portfolio are key to navigating the ups and downs of the market.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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