BAJAJELEC continues its fall as more investors loose confidence

BAJAJ ELECT.LTD trailed the broader market today. It returned -0.39% to close at 468.6. It's recent 5 day performance has been -1.93%, -0.33%, +0.32%, -0.89% and -0.86%.

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BAJAJELEC showed a down trend over the last 3 months. During this period BAJAJELEC returned -6.6% and saw a maximum drawdown of -9.95%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in BAJAJELEC till volatility reduces and a clear trend emerges.

Trend

Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

BAJAJELEC has been underperforming the NIFTY-50 index in recent time, after having outperformed till 23 Apr, 2018. Over the last 3 years and 1 month, BAJAJELEC outperformed the NIFTY-50 index on 49% days. Which indicates that on days BAJAJELEC outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

BAJAJELEC returned losses on 59% days in the last three months. During this time, it delivered on average -0.09% per day. It delivered it's best daily return of +6.06%, during this period, on Thursday, 13 Dec, 2018. There was initially a bearish trend during this period which started on 19 Nov, 2018 and went on till 27 Nov, 2018. The trend delivered -10.32% losses to investors. This was followed by a bullish trend that started on 28 Nov, 2018 and ended on 4 Dec, 2018. This bullish trend delivered +4.58% to investors.

On monthly basis, BAJAJELEC delivered profits and losses in equal number of months. BAJAJELEC delivered profits in more months than NIFTY-50 index. BAJAJELEC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -18.78% compared to -6.42% returned by NIFTY-50 index in Sep 2018. BAJAJELEC had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Aug 2018 to Nov 2018) during which period it delivered -23.86%. It is interesting to note that both BAJAJELEC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Making money from enforcing patents is no more wrong than investing in preferred stock.
-- Nathan Myhrvold

BAJAJELEC 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 BAJAJELEC's volatility from 19 Oct, 2018 to 16 Jan, 2019. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that BAJAJELEC has significant negative skewness in it's return distribution. This indicates that BAJAJELEC is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in BAJAJELEC), if you are an investor in NIFTY50-DIV-POINT, you need to be extra careful (consider limiting your exposure or diversifying) as it is extremely unpredictable and therefore risky.