Based on the trading that took place on September 16, 19 hydropower companies and 34 finance companies recorded the stock price below their face value.
On the one hand, investors of the particular companies have lost 50 percent of their asset while on the other hand, the fall in the stock price gives investors an opportunity to buy cheap shares for profit booking in future.
The stock price of such companies which are on the verge of bankruptcy due to occurrence of losses, declining financial condition, persistent losses, weak corporate governance, huge right issue and failure of giving a dividend to shareholders is declining below their face value.
However, it will be irrational to buy such stocks just because they are cheap. Investors should analyze the management team, financial reports of the last few years and potential growth of such companies before investing their hard-earned money.
