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Should I sell a stock if it's price has fallen by 10%?

Quantum AMC's Nilesh Shetty tells whether you should sell a share if it's price has fallen sharply


Should I hold a stock if it has fallen by 10 per cent from its buying price? Also how can one decide whether the stock has reached its bottom?
-Babu

Bottom price, unfortunately no one knows. But what you need to do is, anytime there's been a big sharp price fall, you should recheck your assumptions and the reason because of which you bought the company. And whether those assumptions still hold valid. If those assumptions have changed, redo your numbers and check the new valuation of the company. But as long as the assumption holds true, the fall in the price might actually be an opportunity for you to add into it. The process that we follow at Quantum is that anytime the share prices fall by 20 per cent, the portfolio manager goes and meet the company to recheck our assumptions. If the assumptions hold then we might even add more into the company.

So as long as the assumptions hold true, you don't have anything to worry about it. But if the assumptions have changed, you might want to redo and recheck what is the reason or whether the upside still holds in that company.

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