479.8 -9.22 (-1.92%) Sell

Stop-loss on the minds of BHARATFORG investors as it destroyed investor wealth

14 min read

BHARAT FORGE LTD significantly underperformed today. It lost -1.92% to close at 479.8. During the last week it grew by +0.69% and saw a maximum drawdown of -2.03% before bouncing back.

[Themes containing BHARATFORG]

Buy-and-Hold investors in BHARATFORG experienced a maximum drawdown of -21.98% over the last three months. It lost -14.69% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +2.2%.


BHARATFORG has been underperforming the NIFTY-50 index in recent time, after having outperformed till 28 Feb, 2018. Over the last 3 years and 1 month, BHARATFORG underperformed the NIFTY-50 index on 50% days. Which indicates that on days BHARATFORG underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

During the last three months BHARATFORG was mostly loss making and delivered on average -0.23% per day. It's best return during this period (of +4.53%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -8.44%) was on Wednesday, 5 Dec, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 31 Oct, 2018. The bullish trend returned +6.85% to investors. This was followed by a bearish trend that started on 2 Jan, 2019 and ended on 8 Jan, 2019. This bearish trend lost -7.88% of investor capital.

BHARATFORG had 4 profitable and 8 loss making months over the last year. During the last year, BHARATFORG underperformed NIFTY-50 index on monthly return basis. BHARATFORG was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -16.11% compared to -6.42% returned by NIFTY-50 index in Sep 2018. BHARATFORG had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Sep 2018 to Jan 2019) during which period it delivered -36.69%. It is interesting to note that both BHARATFORG and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.

BHARATFORG 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 BHARATFORG's volatility from 12 Dec, 2018 to 17 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 BHARATFORG 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 BHARATFORG derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

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

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