GPIL investors hurt by serious losses
22 Jan, 201913 min read
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GODAWARI POW & ISP LTD is a falling knife that can bleed you if you catch it today. It fell by -2.7% to close at 223.45. During the last week it fell by -11.19% and saw a maximum drawdown of -11.19%.
Buy-and-Hold investors in GPIL experienced a maximum drawdown of -43.9% over the last three months. It fell by -42.33% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +42.33% for investors.
GPIL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 21 Sep, 2016 to 25 Jan, 2018. Over the last 3 years and 1 month, GPIL outperformed the NIFTY-50 index on 45% days. Which indicates that on days GPIL outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.
During the last three months GPIL was mostly loss making and delivered on average -0.79% per day. It's best return during this period (of +15.61%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -7.83%) was on Thursday, 22 Nov, 2018. The longest stort-term trend during this period was 5 losing days, which started on 20 Nov, 2018 and ended on 27 Nov, 2018. This bearish trend lost -27.08% of investor capital.
During the last year GPIL had 4 profitable months and 8 loss making months. GPIL returned profits in fewer months than NIFTY-50 index. GPIL significantly outperformed NIFTY-50 index in Apr 2018, when it returned +26.28% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. GPIL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -50.41%. It is interesting to note that both GPIL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Never invest emergency savings in the stock market.
-- Suze Orman
GPIL 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 GPIL's volatility from 14 Nov, 2018 to 22 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 GPIL has significant negative skewness in it's return distribution. This indicates that GPIL is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than GPIL. Therefore, NIFTY-50 must receive a lower allocation than GPIL in your portfolio. NIFTY-50 index usually has shorter drawdown period than GPIL.
On a general note (since you are interested in GPIL), LTTS has performed really well this year and deserves to be closely tracked for investment opportunities.
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