70.95 +0.81 (+1.14%) Buy

Sun shines over BHEL investors as it delivers great returns

13 min read

BHEL outperformed on Friday. It surged by +1.14% to close at 70.95. It is currently trading -30% below it's 52 week high of 102.73.

[Themes containing BHEL]

Buy-and-Hold investors in BHEL experienced a maximum drawdown of -17.12% over the last three months. It fell by -3.47% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


BHEL has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 1 Jan, 2016 to 23 Aug, 2018. Over the last 3 years and 1 month, BHEL underperformed the NIFTY-50 index on 54% days.

BHEL returned losses on 51% days in the last three months. During this time, it delivered on average -0.03% per day. It delivered it's worst daily return of -7.5%, during this period, on Thursday, 25 Oct, 2018. The longest stort-term trend during this period was 5 losing days, which started on 8 Jan, 2019 and ended on 14 Jan, 2019. This bearish trend lost -6.31% of investor capital.

During the last year BHEL had 4 profitable months and 8 loss making months. BHEL returned profits in fewer months than NIFTY-50 index. BHEL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Jun 2018, returned -14.4% compared to -6.42% returned by NIFTY-50 index in Sep 2018. BHEL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -18.1%. It is interesting to note that both BHEL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Try to save something while your salary is small; It's impossible to save after you begin to earn more.
-- Jack Benny

BHEL is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in BHEL's volatility from 25 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 BHEL 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 BHEL derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in BHEL you may find it interesting to know that TORNTPHARM, BRITANNIA and BAJFINANCE are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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