NIFTY-50 ranked better than it's peers on Tuesday. It delivered +0.19% to close at 10908.7. On a day when the overall market breadth was 71%, it closed higher than 40% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.19%.
Buy-and-Hold investors in NIFTY-50 experienced a maximum drawdown of -10.72% over the last three months. It delivered -2.9% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +4.91%.
During the last three months NIFTY-50 delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +2.32%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -2.67%) was on Friday, 5 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 26 Nov, 2018 and went on till 3 Dec, 2018. This bullish trend returned +3.35% to investors.
The last 12 months saw NIFTY-50's investors making profits in 6 months and incurring losses in 6 months. During the last year, NIFTY-50 and NIFTY-50 index had the same number of profitable months. Both NIFTY-50 and NIFTY-50 index delivered almost identical returns during their best performing months. NIFTY-50 and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both NIFTY-50 and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Minimizing downside risk while maximizing the upside is a powerful concept.
-- Mohnish Pabrai
NIFTY-50 is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in NIFTY-50's volatility from 21 Sep, 2018 to 5 Dec, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.
Advanced/professional short-term investors should note that NIFTY-50 has significant positive skewness in it's return distribution. This indicates that investors can expect NIFTY-50 to recover from drawdowns quickly. Which makes NIFTY-50 a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in NIFTY-50 derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.
NIFTY-50 index has more chance of extreme outcomes than NIFTY-50. Therefore, NIFTY-50 must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than NIFTY-50.
Based on your interest in ^NIFTY-50 you may find it interesting to know that LTTS is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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