6249.9 -107.23 (-1.72%) Sell

BAJAJFINSV is a falling knife, continues to bleed every investor trying to catch it

13 min read

BAJAJ FINSERV LTD. was among the worst performers on Friday. It returned -1.72% to close at 6249.9. It is currently trading +29% above it's 52 week low of 4810.6 and is down only -12% from it's 52 week high.

[Themes containing BAJAJFINSV]

BAJAJFINSV showed a strong up trend over the last 3 months. During this period BAJAJFINSV grew by +15.33% and saw a maximum drawdown of -6.63%. There were 2 long signals during this period that returned a cumulative of +0.42% to investors.


BAJAJFINSV has been underperforming the NIFTY-50 index in recent time, after having outperformed till 14 Aug, 2018. Over the last 3 years and 1 month, BAJAJFINSV outperformed the NIFTY-50 index on 52% days.

During the last three months BAJAJFINSV was mostly profitable and delivered on average +0.24% per day. It's best return during this period (of +4.33%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -3.98%) was on Thursday, 6 Dec, 2018. There was initially a bullish trend during this period which started on 2 Nov, 2018 and went on till 9 Nov, 2018. The bullish trend returned +5.73% to investors. This was followed by a bearish trend that started on 20 Dec, 2018 and ended on 24 Dec, 2018. This bearish trend lost -2.06% of investor capital.

On monthly basis, BAJAJFINSV delivered profits in more months over the last year, than losses. BAJAJFINSV delivered profits in more months than NIFTY-50 index. BAJAJFINSV significantly outperformed NIFTY-50 index in Jul 2018, when it returned +20.79% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. BAJAJFINSV had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Feb 2018 to May 2018) during which period it delivered +21.65%.

"Finance is a gun. Politics is knowing when to pull the trigger.

BAJAJFINSV 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 BAJAJFINSV's volatility from 24 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 BAJAJFINSV 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 BAJAJFINSV derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in BAJAJFINSV), two instruments that deserve special mention are RESPONIND and SPLIL. They have significantly outperformed the overall market this year.

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