892.1 -2.99 (-0.34%) Sell

Search for alternative investments is on for BEML investors as it underperforms

13 min read

BEML LIMITED trailed the broader market on Friday. It returned -0.34% to close at 892.1. On a day when the overall market breadth was 71%, it closed higher than 48% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing BEML]

BEML is currently in a down trend. Over the last three months Buy-and-Hold has been a better strategy (returning +52.94%) for BEML's investors than shorting it.


BEML has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, BEML underperformed the NIFTY-50 index on 55% days.

BEML was profitable on 52% days in the last three months. During this time, it delivered on average +0.72% per day. It delivered it's best daily return of +8.93%, during this period, on Friday, 2 Nov, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 6 Nov, 2018. The bullish trend returned +31.09% to investors. This was followed by a bearish trend that started on 9 Jan, 2019 and ended on 14 Jan, 2019. This bearish trend lost -4.55% of investor capital.

On monthly basis, BEML delivered losses in more months over the last year, than profits. BEML delivered profits less regularly than NIFTY-50 index. BEML significantly outperformed NIFTY-50 index in Nov 2018, when it returned +28.2% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. BEML had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -58.27%. It is interesting to note that both BEML and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it .
-- Peter Lynch

BEML 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 BEML's volatility from 2 Nov, 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 BEML has significant negative skewness in it's return distribution. This indicates that BEML is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in BEML 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 BEML. Therefore, NIFTY-50 must receive a lower allocation than BEML in your portfolio. NIFTY-50 index usually has shorter drawdown period than BEML.

On a general note (since you are interested in BEML), HATSUN is a mid cap that deserves to be closely tracked for investment opportunities.

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