Importance of 52 Week High and Low in Stocks

By Advisorymandi
20-December-2018 9:19:12 AM
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Share prices fluctuate in the stock market regularly, where they reach the highest and lowest prices at some point in time. When it comes to making an investment decision, then many people give prime importance to the 52 weeks high and low. Now, what is it and importance to the investors or traders? Let us find out the answers.

 

What is 52 Week High and Low?

A 52 week high and low is primarily the highest and lowest prices of the shares over a 52 week period. One of the main benefits of keeping a tab on the 52-week share prices that it helps you to identify the excellent investment opportunities and also lets you track the performance of your stocks.

For example, suppose you are tracking the changes in the shares prices of a Company ABC over the course of 52 weeks. You find out that shares of the Company ABC traded at Rs 300 per share at its highest and Rs 100 per share at its lowest. Hence, it can be said that the 52 weeks high and low for the Company ABC’s shares was Rs 300 and Rs 100.

 

What is 52 Week High?

The 52 weeks high implies the highest price that a particular stock of the company has attained in the 52 week period.  An increase or rise in the share prices is altogether good news for the company. There are many reasons for the 52 week high, which are as follows:

  • The sales of the company are increasing.
  • The profit of the company is increasing.
  • The earnings prospects of the company are bullish.

Here are the examples of the 52 weeks high that can be found easily on the National Stock Exchange (NSE):

 

What is 52 Week Low?

A 52 week low essentially implies the lowest price that a particular stock of the company has reached in the 52 week period. Determining the 52 week low is extremely important for the traders or investors before they take an investment decision. The prominent reasons behind 52 week low are as follows:

  • Unplanned management of the debts.
  • Not controlling unnecessary costs with respect to the revenue generated resulting in more debts.
  • The new product of the company has fallen badly in the market.

Here are the examples of the 52 week low that can be found easily on the National Stock Exchange (NSE):

Why 52 Week High and Low Matters for the Investors?

The 52 week and high and low share prices are extremely important for the potential investors. More often than not, many investors take into the account 52 weeks high and low of a particular share when looking at the current price. If the share prices reach 52 week low, then the investors might think that it is an excellent time to buy. On the other hand, if the share prices reach 52 weeks high, then the investors might not think that it is the right time to buy, however, they may consider selling or shorting the shares.

 

Bottom Line

It is important to know that the 52 weeks high and low only just gives a clear picture of far the shares of the company have fluctuated in the 52 weeks. There is no doubt that going through 52 weeks high and 52 week low columns on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) websites everyday help in arriving at an excellent investment decision. However, it also cannot be denied that the 52 weeks high and low may not provide a good understanding about the reasons behind the increase or decrease in the share prices. Hence, it is important that you must act smart by undertaking a comprehensive research work before investing.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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