Stoploss and KingFisher airlines

Mr. Sridhar who stays in Mumbai had invested in KFA in the year of 2009 when KFA was trying to make its career in the airline industry. He had invested approximately 1 lakh rs around 70 Rs with KFA stock quantity of 1430.  Even I was captivated by talks of Mr. Sridhar and had invested approx 50 k around 75 rs after talks with Mr. Sridhar.

Those where the times when KFA had appointed Mr. Sanjay as the CEO, announced Europe flights , raising of 100 million dollar funds and what not. Everything was hopeful and bubbling.

The stock surged from 70 to 90 in a month or  two. I was literally sitting on 20% profit  in months.

But then started bad news followed by worst news. The first bad news hit on November 25^th 2010 that the airline debt was 6000 Crore. With this kind of debt number the stock reacted by crashing from 90 to below 80 in days. For some reason I am a guy who believes in stop loss and looking at my broken trendline I exited the stock at 79 Rs which is like 4 Rs profit on the stock.

I did curse myself because I would have made more if sold some months back. I did have a talk with Mr Sridhar before selling , to which Mr Shridhar reacted saying Mr . Mallaya is a man of good times and he will bounce back.

But then bad turned in to worst, KFA decides to shut down its low cost airline king fisher red. This clearly indicated that KFA is not  doing bad but horrible. Mr. Sridhar’s confidence had now turned in to doubt. He was worried, following up news regarding KFA on TV and not a single day I remember when he did not discuss KFA.

Then came the nightmare government (Service tax department) freezed KFA’s bank accounts. It was then followed by flight cancellations, discontinuing international flights, DGCA summons , staff strikes and the debt now mounting to 7500 Crore.

Today because of KFA issues the other group company i.e. united brew is also facing the heat. It’s a clear falling knife which started its journey from 90 and it’s today traded at 4 Rs in the hands of cruel traders.

I and Shridhar still meet but for past 1 year i have not heard him talking about KFA and neither had I ever asked him about KFA. I am not sure he sold it or not , I hope he has already.

In 2010 itself the uptrend line was broken look at the above charts. It was a clear signal to exit KFA. So even if you are investor follow strict stoploss how much ever you love the company.

Do not let your love change in to loss and night mare.

Will you still hold KFA , do write below we would like to hear from you.

See syllabus for Technical analysis training in Mumbai,India.