Don't buy CASTROLIND now, it is underperforming the market
18 Jan, 201913 min read
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CASTROL INDIA LIMITED delivered lacklustre performance on Friday. It fell by -0.48% to close at 165.65. On a day when the overall market breadth was 71%, it closed higher than 38% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
[Themes containing CASTROLIND]
CASTROLIND showed a strong bullish trend over the last 3 months. During this period CASTROLIND surged by +17.73% and saw a maximum drawdown of -8.03%. There were 2 long signals during this period that returned a cumulative of +1.85% to investors.
CASTROLIND has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 12 Jan, 2016 to 28 Aug, 2018. Over the last 3 years and 1 month, CASTROLIND underperformed the NIFTY-50 index on 51% days.
CASTROLIND was profitable on 52% days in the last three months. During this time, it delivered on average +0.28% per day. It delivered it's best daily return of +5.93%, during this period, on Tuesday, 15 Jan, 2019. The longest stort-term trend during this period was 5 losing days, which started on 4 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -6.53% of investor capital.
During the last year CASTROLIND had 7 profitable months and 5 loss making months. CASTROLIND returned profits in more months than NIFTY-50 index. CASTROLIND was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -12.44% compared to -6.42% returned by NIFTY-50 index in Sep 2018. CASTROLIND had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Oct 2018 to Jan 2019) during which period it delivered +13.4%. It is interesting to note that both CASTROLIND and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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CASTROLIND is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in CASTROLIND's volatility from 26 Oct, 2018 to 11 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 CASTROLIND has significant negative skewness in it's return distribution. This indicates that CASTROLIND is very risky for short-term investment and can significantly underperform for long durations.
Investors trading in CASTROLIND derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.
CASTROLIND has more chance of extreme outcomes than the NIFTY-50 index. Therefore, CASTROLIND must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than CASTROLIND.
Based on your interest in CASTROLIND you may find it interesting to know that LTI, RESPONIND and MERCK have all shown remarkable performance this year and deserve to be on every investor's watchlist.
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