1080.05 -14.26 (-1.32%) Buy

Don't buy ECLERX now, it is underperforming the market

13 min read

ECLERX SERVICES LTD performed worse than the broader market on Friday. It fell by -1.32% to close at 1080.05. On a day when the overall market breadth was 71%, it closed higher than 41% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing ECLERX]

ECLERX showed a flat trend over the last 3 months. During this period ECLERX delivered -0.67% and saw a maximum drawdown of -13.54%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ECLERX till volatility reduces and a clear trend emerges.


ECLERX has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 26 Oct, 2016 to 7 Sep, 2018. Over the last 3 years and 1 month, ECLERX underperformed the NIFTY-50 index on 53% days.

During the last three months ECLERX delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +10.35%) was on Thursday, 15 Nov, 2018. While it's worst loss in the same period (of -4.4%) was on Friday, 30 Nov, 2018. The longest stort-term trend during this period was 8 losing days, which started on 16 Nov, 2018 and ended on 28 Nov, 2018. This bearish trend lost -9.98% of investor capital.

During the last year ECLERX had 5 profitable months and 7 loss making months. Profitable number of months of ECLERX and NIFTY-50 index were the same. ECLERX was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Aug 2018, returned -17.0% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ECLERX and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both ECLERX and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"There can be no rise in the value of labour without a fall of profits.

ECLERX 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 surge in ECLERX's volatility from 29 Oct, 2018 to 15 Nov, 2018. 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 ECLERX has significant negative skewness in it's return distribution. This indicates that ECLERX is very risky for short-term investment and can significantly underperform for long durations.

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

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

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