2840.9 -0.05 (-0.0%) Buy

Stop-loss on the minds of BAJAJ-AUTO investors as it underperforms

13 min read

BAJAJ AUTO LIMITED performed worse than the broader market on Tuesday. It returned -0.0% to close at 2840.9. On a day when the overall market breadth was 71%, it closed higher than 44% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.19%.

[Themes containing BAJAJ-AUTO]

BAJAJ-AUTO is currently in a up trend. The previous long signal in BAJAJ-AUTO has not been profitable for investors in general. If you are invested in BAJAJ-AUTO at current levels please make sure that your allocation is limited and that your portfolio is well diversified.


BAJAJ-AUTO has been outperforming the NIFTY-50 index in recent time. Over the last 2 years and 12 months, BAJAJ-AUTO underperformed the NIFTY-50 index on 52% days.

During the last three months BAJAJ-AUTO was mostly profitable and delivered on average +0.05% per day. It's best return during this period (of +4.61%) was on Thursday, 29 Nov, 2018. While it's worst loss in the same period (of -4.31%) was on Wednesday, 24 Oct, 2018. There was initially a bearish trend during this period which started on 15 Oct, 2018 and went on till 19 Oct, 2018. The trend delivered -4.35% losses to investors. This was followed by a bullish trend that started on 25 Oct, 2018 and ended on 9 Nov, 2018. This bullish trend delivered +8.52% to investors.

On monthly basis, BAJAJ-AUTO delivered profits and losses in equal number of months. BAJAJ-AUTO delivered profits less regularly than NIFTY-50 index. BAJAJ-AUTO was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Feb 2018, returned -9.66% compared to -6.42% returned by NIFTY-50 index in Sep 2018. BAJAJ-AUTO and NIFTY-50 index, both had periods of 2 consecutive profitable months.

Courage is being scared to death, but saddling up anyway.
-- John Wayne

BAJAJ-AUTO is becoming less 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 BAJAJ-AUTO's volatility from 21 Sep, 2018 to 20 Nov, 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 BAJAJ-AUTO has significant negative skewness in it's return distribution. This indicates that BAJAJ-AUTO is very risky for short-term investment and can significantly underperform for long durations.

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

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

On a general note (since you are interested in BAJAJ-AUTO), VINATIORGA is a small cap that deserves to be closely tracked for investment opportunities.

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