21.8 -0.54 (-2.46%) Buy

Don't consider investing in HFCL now, it is risky at the moment

13 min read

HFCL ranked among the worst performers today. On a longer term basis, investors in HIMACHAL FUT COM LTD made +0.1% per day. Tuesday's performance of -2.46% was a significant underperformance compared to it's daily average.

[Themes containing HFCL]

HFCL showed a strong up trend over the last 3 months. During this period HFCL returned +10.66% and saw a maximum drawdown of -17.41%. There was a long signal during this period which returned +3.81%.


HFCL has been underperforming the NIFTY-50 index in recent time, after having outperformed till 18 Sep, 2017. Over the last 3 years and 1 month, HFCL underperformed the NIFTY-50 index on 58% days.

During the last three months HFCL delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +12.21%) was on Tuesday, 8 Jan, 2019. While it's worst loss in the same period (of -4.0%) was on Monday, 12 Nov, 2018. There was initially a bearish trend during this period which started on 14 Nov, 2018 and went on till 20 Nov, 2018. The trend delivered -6.48% losses to investors. This was followed by a bullish trend that started on 14 Dec, 2018 and ended on 19 Dec, 2018. This bullish trend delivered +14.02% to investors.

On monthly basis, HFCL delivered profits and losses in equal number of months. HFCL delivered profits in more months than NIFTY-50 index. HFCL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -22.97% compared to -6.42% returned by NIFTY-50 index in Sep 2018. HFCL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Jul 2018 to Sep 2018) during which period it delivered -31.61%. It is interesting to note that both HFCL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Success seems to be connected with action. Successful people keep moving. They make mistakes, but they don't quit.
-- Conrad Hilton

HFCL is becoming more 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 HFCL's volatility from 19 Dec, 2018 to 7 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 HFCL has significant negative skewness in it's return distribution. This indicates that HFCL is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in HFCL you may find it interesting to know that HATSUN is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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