966.3 +11.74 (+1.21%) Sell

Profit booking on the minds of HCLTECH investors as it ranks better than it's peers but, has not managed to breakout

14 min read

HCL TECHNOLOGIES LTD delivered good returns on Friday. It grew by +1.21% to close at 966.3. On a day when the overall market breadth was 71%, it closed higher than 45% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing HCLTECH]

HCLTECH is currently in a down trend. Over the last three months trading short signals has not been a profitable strategy for HCLTECH's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned +0.81%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to HCLTECH.


HCLTECH has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, HCLTECH underperformed the NIFTY-50 index on 47% days. Which indicates that on days HCLTECH underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

During the last three months HCLTECH was mostly profitable and delivered on average +0.03% per day. It's best return during this period (of +5.05%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.99%) was on Friday, 7 Dec, 2018. There was initially a bearish trend during this period which started on 13 Nov, 2018 and went on till 15 Nov, 2018. The trend delivered -4.68% losses to investors. This was followed by a bullish trend that started on 30 Nov, 2018 and ended on 5 Dec, 2018. This bullish trend delivered +3.67% to investors.

HCLTECH had 7 profitable and 5 loss making months over the last year. HCLTECH was profitable in more months than NIFTY-50 index. HCLTECH was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -13.36% compared to -6.42% returned by NIFTY-50 index in Sep 2018. HCLTECH had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Jun 2018 to Sep 2018) during which period it delivered +18.34%. It is interesting to note that both HCLTECH and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"Your net worth to the world is usually determined by what remains after your bad habits are subtracted from your good ones.

HCLTECH is becoming less 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 HCLTECH's volatility from 19 Oct, 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 HCLTECH has significant positive skewness in it's return distribution. This indicates that investors can expect HCLTECH to recover from drawdowns quickly. Which makes HCLTECH a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in HCLTECH derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in HCLTECH), two mid cap instruments that deserve special mention are HATSUN and BATAINDIA. They have significantly outperformed the overall market.

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