440.25 +18.28 (+4.15%) Sell

FRETAIL does a dead cat bounce, it's still too early to buy into it

13 min read

FUTURE RETAIL LIMITED outperformed today. It surged by +4.15% to close at 440.25. It's recent 5 day performance has been -5.49%, -1.85%, -0.39%, +2.13% and +1.44%.

[Themes containing FRETAIL]

FRETAIL showed a strong bearish trend over the last 3 months. During this period FRETAIL delivered -12.3% and saw a maximum drawdown of -25.16%. There were 3 short signals during this period that returned a cumulative of +3.14% to investors.


FRETAIL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 5 Dec, 2016 to 24 Nov, 2017. Over the last 2 years 4 months and 8 days, FRETAIL outperformed the NIFTY-50 index on 49% days. Which indicates that on days FRETAIL outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

FRETAIL returned losses on 59% days in the last three months. During this time, it delivered on average -0.18% per day. It delivered it's worst daily return of -5.66%, during this period, on Thursday, 27 Dec, 2018. The longest stort-term trend during this period was 8 losing days, which started on 26 Dec, 2018 and ended on 4 Jan, 2019. This bearish trend lost -22.71% of investor capital.

The last 12 months saw FRETAIL's investors making profits in 5 months and incurring losses in 7 months. During the last year, FRETAIL and NIFTY-50 index had the same number of profitable months. FRETAIL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -16.28% compared to -6.42% returned by NIFTY-50 index in Sep 2018. FRETAIL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -11.52%. It is interesting to note that both FRETAIL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"The real measure of your wealth is how much you'd be worth if you lost all your money

FRETAIL 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 surge in FRETAIL's volatility from 7 Dec, 2018 to 4 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 FRETAIL has significant negative skewness in it's return distribution. This indicates that FRETAIL is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in FRETAIL), IGARASHI is a small cap that deserves to be closely tracked for investment opportunities.

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