GRASIM investors looking to cut their losses short
18 Jan, 201914 min read
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GRASIM INDUSTRIES LTD delivered lacklustre performance today. It delivered -0.38% to close at 824.95. During the last week it surged by +1.38% and saw a maximum drawdown of -0.38% before bouncing back.
GRASIM is currently in a bearish trend. The current bearish signal has generated a profit of +5.69% for investors in the last three months.
GRASIM has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 18 Jul, 2017 to 15 Jan, 2019. Over the last 3 years and 1 month, GRASIM underperformed the NIFTY-50 index on 50% days. Which indicates that on days GRASIM underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.
GRASIM was profitable on 53% days in the last three months. During this time, it delivered on average -0.07% per day. It delivered it's worst daily return of -7.72%, during this period, on Thursday, 15 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 29 Oct, 2018 and went on till 5 Nov, 2018. This bullish trend returned +11.87% to investors.
The last 12 months saw GRASIM's investors making profits in 4 months and incurring losses in 8 months. GRASIM was less consistent in delivering monthly returs than NIFTY-50 index. GRASIM was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -16.54% compared to -6.42% returned by NIFTY-50 index in Sep 2018. GRASIM and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both GRASIM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Not everything that can be counted counts, and not everything that counts can be counted.
-- Albert Einstein
GRASIM 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 GRASIM's volatility from 24 Oct, 2018 to 1 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 GRASIM has positive skewness in it's return distribution. This indicates that investors can expect GRASIM to make attempts to recover from drawdowns quickly. Which makes GRASIM a good candidate for momentum based trading on short-term bullish trends or counter-trends.
Investors trading in GRASIM derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.
NIFTY-50 index has more chance of extreme outcomes than GRASIM. Therefore, NIFTY-50 must receive a lower allocation than GRASIM in your portfolio. GRASIM usually has shorter drawdown period than the NIFTY-50 index.
Based on your interest in GRASIM you may find it interesting to know that NIFTY50-PR-2X-LEV has delivered similar performance as GRASIM and can be considered as an alternative investment candidate (to GRASIM).
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