Should You Hold or Sell Yes Bank Shares for Long-Term Investment?
Your question is valid, and the decision to either hold or sell Yes Bank shares largely depends on your investment strategy and risk tolerance. Here are some insights to guide you:
Current Market Analysis
According to my analysis, at a current share price of 27 rupees, it may be prudent to sell 4,000 shares and safeguard your capital. This allows you to recoup some of your investment while keeping the remaining shares for the long term. If you don’t want to wait for the price to reach 27 rupees, you should sell shares equal to your invested capital and retain the rest of the shares for the long term.
Long-Term Holding Strategy
If you are a long-term investor and willing to bear some risk, you can continue holding Yes Bank shares for a minimum of 3 to 5 years. This approach requires patience and the belief that the stock is undervalued and will realize its true potential over time. However, if you are risk-averse, it's advisable to sell and reallocate your capital to more stable and potentially higher-performing stocks.
Deciding Based on Fundamentals and Greed
It's crucial to consider the underlying fundamentals of Yes Bank before making any decisions. If the company's financials and growth prospects are weak, it may be wise to exit your position. On the other hand, if you bought the shares with the hope that the stock would rise due to speculative or emotional reasons rather than fundamental value, holding the shares may provide the opportunity to recover your initial investment.
Alternative Investment Options
Based on my analysis, if you cannot justify holding Yes Bank shares for a prolonged period, it's preferable to avoid this stock entirely. Investing in Yes Bank may lead to significant losses if the company continues to face challenges. Instead, consider investing in more stable and growth-oriented companies such as ICICI Bank and HDFC Bank. These banks have a proven track record of performance and are likely to offer better returns within 2 to 3 months.
Strategies for Cost Averaging
Your purchase price isn't bad, but you can further reduce it by adding to your position at current market prices. The current market price as of 25/07/2021 is 13 rupees. You can buy 600 or 1,600 additional shares, thereby averaging down your cost. This strategy can be particularly effective if the stock price is expected to rise in the future.
Conclusion
The decision to hold or sell Yes Bank shares requires careful consideration of market conditions, personal financial goals, and risk tolerance. While there is always the possibility of future upside, it's essential to be realistic about the current state of the company's fundamentals. If you decide to hold, be prepared for the long haul and monitor the company's performance closely. If you decide to sell, consider reallocating your capital to more resilient and potentially more profitable stocks.
Disclaimer: My views are non-professional and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.