Are you evaluating investing in FSL? Wait as it underperformed
18 Jan, 201913 min read
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FIRSTSOURCE SOLU. LTD. significantly underperformed on Friday. It lost -1.89% to close at 49.4. It is currently trading -39% below it's 52 week high of 81.45.
FSL showed a strong down trend over the last 3 months. During this period FSL lost -17.46% and saw a maximum drawdown of -23.4%. There was a short signal during this period which returned +11.19%.
FSL has been underperforming the NIFTY-50 index in recent time, after having outperformed till 14 Jun, 2018. Over the last 3 years and 1 month, FSL underperformed the NIFTY-50 index on 56% days.
During the last three months FSL was mostly loss making and delivered on average -0.27% per day. It's best return during this period (of +8.89%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -4.64%) was on Monday, 10 Dec, 2018. There was initially a bullish trend during this period which started on 28 Nov, 2018 and went on till 5 Dec, 2018. The bullish trend returned +12.5% to investors. This was followed by a bearish trend that started on 17 Dec, 2018 and ended on 28 Dec, 2018. This bearish trend lost -10.32% of investor capital.
FSL had 7 profitable and 5 loss making months over the last year. FSL was profitable in more months than NIFTY-50 index. FSL significantly outperformed NIFTY-50 index in Feb 2018, when it returned +26.46% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. FSL had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Feb 2018 to May 2018) during which period it delivered +61.2%. It is interesting to note that both FSL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Finance is not merely about making money. It's about achieving our deep goals and protecting the fruits of our labor. It's about stewardship and, therefore, about achieving the good society.
-- Robert J. Shiller
FSL is becoming more volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in FSL's volatility from 29 Nov, 2018 to 10 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 FSL has significant negative skewness in it's return distribution. This indicates that FSL is very risky for short-term investment and can significantly underperform for long durations.
FSL has more chance of extreme outcomes than the NIFTY-50 index. Therefore, FSL must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than FSL.
On a general note (since you are interested in FSL), NIFTY-GS-15YRPLUS has performed really well and deserves to be closely tracked for investment opportunities.
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