354.2 -1.0 (-0.28%) Buy

Don't go shopping for BPCL now, it is underperforming the market

13 min read

BPCL trailed the broader market today. On a longer term basis, investors in BHARAT PETROLEUM CORP LT made +0.12% per day. Friday's performance of -0.28% was a underperformance compared to it's daily average.

[Themes containing BPCL]

BPCL showed a strong bullish trend over the last 3 months. During this period BPCL increased by +24.92% and saw a maximum drawdown of -10.6%. There was a long signal during this period which returned +8.2%.


BPCL has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 5 Sep, 2017 to 9 Oct, 2018. Over the last 3 years and 1 month, BPCL outperformed the NIFTY-50 index on 51% days.

During the last three months BPCL was mostly profitable and delivered on average +0.38% per day. It's best return during this period (of +6.67%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -4.58%) was on Wednesday, 28 Nov, 2018. The longest stort-term trend during this period was 8 profitable days, which started on 12 Dec, 2018 and went on till 21 Dec, 2018. This bullish trend returned +13.83% to investors.

The last 12 months saw BPCL's investors making profits in 5 months and incurring losses in 7 months. During the last year, BPCL and NIFTY-50 index had the same number of profitable months. BPCL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -25.32% compared to -6.42% returned by NIFTY-50 index in Sep 2018. BPCL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Feb 2018 to Apr 2018) during which period it delivered -19.5%.

The difference between playing the stock market and the horses is that one of the horses must win.
-- Joey Adams

BPCL 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 BPCL's volatility from 22 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 BPCL has significant positive skewness in it's return distribution. This indicates that investors can expect BPCL to recover from drawdowns quickly. Which makes BPCL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in BPCL derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in BPCL you may find it interesting to know that BATAINDIA, LTTS and LTI are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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