Burger King share price plunges 10 pct today; Anil Singhvi says be cautious on stocks with high valuations

Burger, Biscuit and Biryani – these have been the flavor of markets during the entire week. Be it subscription of issues in Initial Public Offering (IPO) or buying of shares. The food stocks are seeing traction like there is no tomorrow. This is the beauty of the markets, Zee Business Managing Editor Anil Singhvi said and added that everybody wants to ride a rising wave.  

The Market Guru had on Thursday advised investors how to protect their profits in the Burger King stock that had almost tripled from the issue price of Rs 60. On its bumper listing and strong show even after that, Singhvi said that just sentiment is driving this stock. This performance is not due to liquidity or the fundamentals of the company, he added.  

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He said that everybody will readily buy on circuit and they should sell the stock once the stop loss is triggered.  

He said that Burger King share price had more than tripled. What more should the investors expect, he asked. Zee Business has repeatedly been saying that the investors should trail their stop loss, Singhvi said.  

He said that if the investors did that on Thursday, their exit would have been good. Valuations and outlook is one thing, but currently there was a demand-supply situation. He said that flushed with cash the investors bought this stock but the valuations of this stock are not Rs 200. 

He said that it is very important to have a sensible approach. It is not correct to think that the prices will go only upwards. At some point the valuation will catch-up. 

He clarified that there was no problem with Burger King as a company, but wealth will be created only when the stocks are bought at right valuations. 

The investors should give it a thought when there is a Euphoria around any stock. 

The situation is same with Jubilant Food. 

He said that these stocks have high valuations and when there will be a correction, these stocks will appear to be expensive for investors. 

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Burger King stock fell by 10 per cent on Friday and were trading around Rs 157 at 10:55 am.