Can I Buy LVB Shares at Current Market Scenario?

Dear investors, the current market scenario for LVB (Lawson Venture Bank) is a daunting one. The equity capital is already at a premium, and the Reserve Bank of India (RBI) is contemplating writing off some bonds. Given the context, it would be wise to avoid this stock at the moment.

The fundamental and technical indicators are not favorable for LVB. Investing in it could result in substantial losses, akin to the situation faced by investors in Yes Bank. Many individuals jumped into Yes Bank with high hopes, believing it would correct its issues without realizing the potential traps. Remember, 'Don't try to catch a falling knife.' This advice applies equally to LVB.

While some might argue that there is potential for short-term gains due to the removal of money restrictions, the long-term outlook for LVB remains bleak. A recently updated clarification from the government states that the entire paid-up capital will be written off, making the value of the shares effectively zero. Investing in a loss-making company is a risky proposition, and as a strict rule, I advise against it.

Short-term Investment Strategy

For those who are still inclined to take a chance, a conservative approach to investing in LVB might be to use a portion of money that you can afford to lose. This 'party fund' is a term I use for an amount set aside for such speculative investments. If the investment performs well, great; if not, at least you haven't jeopardized essential assets.

In the short term, if you still decide to invest, the market might recognize the removal of money restrictions as a positive, leading to a potential rise of 20-30%. However, this is purely speculative, and reliance on such short-term gains is not advisable.

Technical Analysis

Technical analysis suggests that purchasing at specific price points could be profitable. For instance, entering at 33, adding more at 23, and more at 27, with a selling target of 53, might yield positive results. However, the key is to avoid increasing your stake if the price drops below your initial purchase price. Patience and a disciplined approach are paramount.

Conclusion

Given the current and forecasted market scenarios, investing in LVB is fraught with risks. The potential for significant losses is high, and the long-term outlook is pessimistic. As always, it's crucial to conduct thorough due diligence and consider your risk tolerance before making any investment decisions.

May the force be with you, and I hope this advice helps you make an informed decision. If you appreciate the insights provided, an upvote would be greatly appreciated.