GATI LIMITED is a falling knife that can bleed you if you catch it on Friday. It fell by -3.15% to close at 78.4. On a day when the overall market breadth was 71%, it closed higher than 31% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
GATI showed a bullish trend over the last 3 months. During this period GATI surged by +4.05% and saw a maximum drawdown of -15.39%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in GATI till volatility reduces and a clear trend emerges.
GATI has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 2 Aug, 2016 to 1 Oct, 2018. Over the last 3 years and 1 month, GATI underperformed the NIFTY-50 index on 57% days.
GATI returned losses on 62% days in the last three months. During this time, it delivered on average +0.09% per day. It delivered it's best daily return of +11.25%, during this period, on Wednesday, 21 Nov, 2018. The longest stort-term trend during this period was 11 losing days, which started on 26 Nov, 2018 and ended on 10 Dec, 2018. This bearish trend lost -16.55% of investor capital.
During the last year GATI had 4 profitable months and 8 loss making months. GATI returned profits in fewer months than NIFTY-50 index. GATI significantly outperformed NIFTY-50 index in Jul 2018, when it returned +38.86% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. GATI and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both GATI and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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GATI 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 fall in GATI's volatility from 22 Nov, 2018 to 17 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 GATI has significant negative skewness in it's return distribution. This indicates that GATI is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than GATI. Therefore, NIFTY-50 must receive a lower allocation than GATI in your portfolio. NIFTY-50 index usually has shorter drawdown period than GATI.
Based on your interest in GATI you may find it interesting to know that INFY, TORNTPHARM and BAJFINANCE are large caps that have all shown remarkable performance and qualify to be on every investor's watchlist.
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