Are you evaluating investing in ESTER? Avoid as it is a falling knife that can bleed you if you catch it
18 Jan, 201913 min read
Share with friends 
ESTER INDUSTRIES LTD is a falling knife that can bleed you if you catch it on Friday. It lost -1.86% to close at 34.35. It is currently trading -55% below it's 52 week high of 77.2.
ESTER showed a strong down trend over the last 3 months. During this period ESTER lost -14.12% and saw a maximum drawdown of -26.88%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ESTER till volatility reduces and a clear trend emerges.
ESTER has been underperforming the NIFTY-50 index in recent time, after having outperformed till 5 Jan, 2016. ESTER is currently at it's worst performance to the NIFTY-50 index and therefore does not make a good investment candidate. Over the last 3 years and 1 month, ESTER underperformed the NIFTY-50 index on 58% days.
During the last three months ESTER was mostly loss making and delivered on average -0.21% per day. It's best return during this period (of +8.5%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -6.44%) was on Tuesday, 20 Nov, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +18.95% to investors. This was followed by a bearish trend that started on 12 Nov, 2018 and ended on 20 Nov, 2018. This bearish trend lost -17.99% of investor capital.
ESTER had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of ESTER and NIFTY-50 index were the same. ESTER was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -20.87% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ESTER and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both ESTER and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
If you are standing on the platform when the train has pulled away, It's not going to back up for you. When a bull market takes off, It's not going to back up for you.
-- Don Connelly
ESTER 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 surge in ESTER's volatility from 19 Oct, 2018 to 5 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 ESTER has significant negative skewness in it's return distribution. This indicates that ESTER is very risky for short-term investment and can significantly underperform for long durations.
ESTER has more chance of extreme outcomes than the NIFTY-50 index. Therefore, ESTER must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than ESTER.
On a general note (since you are interested in ESTER), LTTS has performed really well this year and deserves to be closely tracked for investment opportunities.
... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.
All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.
We want to empower investors with all the tools and analysis required by them to make a rational investment decision.
If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute