1355.7 +20.14 (+1.49%) Sell

ASIANPAINT shows sign of weakness as investors do cost averaging

13 min read

ASIANPAINT performed better than the broader market today. On a longer term basis, investors in ASIAN PAINTS LIMITED made +0.09% per day. Tuesday's performance of +1.49% was a significant outperformance compared to it's daily average.

[Themes containing ASIANPAINT]

Buy-and-Hold investors in ASIANPAINT experienced a maximum drawdown of -12.75% over the last three months. It returned +4.98% during this up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.


ASIANPAINT has been outperforming the NIFTY-50 index in recent time. Over the last 2 years and 12 months, ASIANPAINT outperformed the NIFTY-50 index on 51% days.

During the last three months ASIANPAINT delivered losses on 55% days. However, it still managed to end this period in a profit. It's best return during this period (of +4.26%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -5.16%) was on Tuesday, 23 Oct, 2018. There was initially a bearish trend during this period which started on 1 Oct, 2018 and went on till 5 Oct, 2018. The trend delivered -6.63% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 31 Oct, 2018. This bullish trend delivered +3.35% to investors.

On monthly basis, ASIANPAINT delivered profits and losses in equal number of months. ASIANPAINT delivered profits less regularly than NIFTY-50 index. ASIANPAINT significantly outperformed NIFTY-50 index in Jul 2018, when it returned +12.25% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. ASIANPAINT had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Mar 2018 to May 2018) during which period it delivered +13.36%. It is interesting to note that both ASIANPAINT and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Success is walking from failure to failure with no loss of enthusiasm.
-- Winston Churchill

ASIANPAINT is becoming more volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in ASIANPAINT'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 ASIANPAINT has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

Investors trading in ASIANPAINT derivatives at this moment can consider 'Long Straddle' options strategy to receive better risk-adjusted returns.

ASIANPAINT has more chance of extreme outcomes than the NIFTY-50 index. Therefore, ASIANPAINT must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than ASIANPAINT.

On a general note (since you are interested in ASIANPAINT), two instruments that have been extremely volatile in recent times are IEX and ~HOMEAPPLIANCES. Investors in these instruments should consider reducing their exposure (to IEX and ~HOMEAPPLIANCES) and diversifying their portfolios.

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