Ace investor Rakesh Jhunjhunwala has bought 25 lakh shares in Jubilant Pharmova and his wife Rekha Jhunjhunwala bought 20 lakh shares. The stock price jumped after the news but couldn’t sustain at higher levels. There was another block deal in the counter as Jhunjhunwala’s investing company Rare Enterprises sold 40.25 lakh shares of the company.

So, this wasn’t any major investment by Jhunjhunwala. It was possibly just change of hands for the stock. Still, the combined holding of Jhunjhunwala and his wife increased in the company by almost 5 lakh shares. As per June quarter shareholding pattern, Jhunjhunwala owns nearly 6.3 percent stake in the company.

Whenever a big investor picks up stake in any company, the stock price usually jumps. And, this happens mainly because of less supply of shares and many retail investors placing orders in the company.

In the past, investors like Dolly Khanna, Radhakishan Damani, Ramesh Damani, Raamdeo Agrawal, Vijay Kedia, Nemish Shah and Porinju Veliyath have led to increased interest in some counters whenever they pick or sell stake. Long term investors should conduct due diligence before investing in any company. It is not a bad idea to follow big investors but at times, they enter at a good price and exit with profit while small investors remain trapped as their entry point is usually higher due to euphoria.