Want to invest in HDFCBANK? Wait as it underperformed broader market
22 Jan, 201913 min read
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HDFCBANK underperformed broader market today. On a longer term basis, investors in HDFC BANK LTD made +0.1% per day. Tuesday's performance of -0.57% was a significant underperformance compared to it's daily average.
HDFCBANK showed a up trend over the last 3 months. During this period HDFCBANK returned +7.61% . There was a long signal during this period which returned +6.56%.
HDFCBANK has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, HDFCBANK outperformed the NIFTY-50 index on 51% days.
During the last three months HDFCBANK was mostly profitable and delivered on average +0.12% per day. It's best return during this period (of +2.21%) was on Monday, 26 Nov, 2018. While it's worst loss in the same period (of -1.78%) was on Monday, 29 Oct, 2018. There was initially a bearish trend during this period which started on 25 Oct, 2018 and went on till 31 Oct, 2018. The trend delivered -4.1% losses to investors. This was followed by a bullish trend that started on 13 Nov, 2018 and ended on 19 Nov, 2018. This bullish trend delivered +4.76% to investors.
On monthly basis, HDFCBANK delivered profits and losses in equal number of months. HDFCBANK delivered profits in more months than NIFTY-50 index. HDFCBANK significantly outperformed NIFTY-50 index in Nov 2018, when it returned +11.34% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. HDFCBANK had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Mar 2018 to May 2018) during which period it delivered +11.56%. It is interesting to note that both HDFCBANK and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.
-- William A. Feather
HDFCBANK 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 HDFCBANK's volatility from 29 Oct, 2018 to 16 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 HDFCBANK has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
Investors trading in HDFCBANK derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.
HDFCBANK has more chance of extreme outcomes than the NIFTY-50 index. Therefore, HDFCBANK must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than HDFCBANK.
Based on your interest in HDFCBANK you may find it interesting to know that BATAINDIA is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.
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