Reason for Sharp decline in Stock Price

[satyakaran]

This is my first post here. I recently came into stock market and looking for few valuable info.
I see many times stock price go down very sharply. What could be reason for that.

Here is one example (link is pointing to Google Finance):
I cann't post link so removed. It is "Sadbhav Engineering Limited" in Google Finance.

Here you see, price went down very sharply in 2010. What can cause that. I searched for news in that period but could not find any. Please help.

Also, if possible then please reply :
How can avoid falling in that trap?

This should help many investors.

[rmani84]

Hi Satya,

Read my book on Art of Stock Investing ... Its now available free of cost in PDF format ... You can fill in your form of interest at http://bse2nse.com/books-training/31...investing.html

You will find the information in the book very much helpful as a beginner

[AastroGuru]

This is my first post here. I recently came into stock market and looking for few valuable info.
I see many times stock price go down very sharply. What could be reason for that.

Here is one example (link is pointing to Google Finance):
I cann't post link so removed. It is "Sadbhav Engineering Limited" in Google Finance.

Here you see, price went down very sharply in 2010. What can cause that. I searched for news in that period but could not find any. Please help.

Also, if possible then please reply :
How can avoid falling in that trap?

This should help many investors.

I also noticed such steep falls in many companies, when I see google finance all historic data of a particular company, like sadbhav.

I am not very sure, I am a beginner, but I believe it is because of stock split.

For example a company has 10000 total shares (for simplicity) with price as 100 each each.

When they split the stock say 1:5, each stock is divided into 5 pieces, then single stock price would come to 20 rs.

But now, instead of 10000 total shares, the company will have 50000 total shares each of 20 rs.

In this case, in google finance the stock price will show a sudden drop from 100 to 20 rs.

Someone correct me if I am wrong.

[AastroGuru]

This is my first post here. I recently came into stock market and looking for few valuable info.
I see many times stock price go down very sharply. What could be reason for that.

Here is one example (link is pointing to Google Finance):
I cann't post link so removed. It is "Sadbhav Engineering Limited" in Google Finance.

Here you see, price went down very sharply in 2010. What can cause that. I searched for news in that period but could not find any. Please help.

Also, if possible then please reply :
How can avoid falling in that trap?

This should help many investors.

Hi satya,

SADBHAV engg had a stock split on 7th Dec, 2010, the reason why you are seeing a steep fall in price in Google Finance.

Splits: Dec 7, 2010 [10:1]

Before the split, 1 share price was around 1395 rupees.

Split occured on 7th Dec, of which 1 share was split into 10 shares [10:1 i mean 10 times]

So after the split the price of 1 share is adjusted to 132.5 rupees each share approximately.

In order to find the split history, use yahoo finance, which is better in giving exact dates in which split occurred and what is the ratio of split.