113.0 -0.89 (-0.79%) Buy

HIRECT investors looking to cut their losses short

13 min read

HIND RECTIFIER LIMITED underperformed broader market on Wednesday. It delivered -0.79% to close at 113.0. On a day when the overall market breadth was 70%, it closed higher than 74% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0084%.

[Themes containing HIRECT]

HIRECT is currently in a bullish trend. Over the last three months Buy-and-Hold has been a better strategy (returning +4.48%) for HIRECT's investors than trading long signals.


HIRECT has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 11 Aug, 2017 to 23 Apr, 2018. Over the last 3 years and 1 month, HIRECT underperformed the NIFTY-50 index on 55% days.

HIRECT returned losses on 56% days in the last three months. During this time, it delivered on average +0.12% per day. It delivered it's best daily return of +15.56%, during this period, on Tuesday, 30 Oct, 2018. The longest stort-term trends during this period were 4 profitable and losing days. The bullish trend (which returned +13.35%) started on 10 Jan, 2019 and went on till 15 Jan, 2019 while the bearish trend (which returned -10.32%) started on 16 Jan, 2019 and went on till 21 Jan, 2019.

The last 12 months saw HIRECT's investors making profits in 5 months and incurring losses in 7 months. During the last year, HIRECT delivered profits in more months than NIFTY-50 index. HIRECT significantly outperformed NIFTY-50 index in Aug 2018, when it returned +18.58% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. HIRECT had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -17.24%. It is interesting to note that both HIRECT and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.
-- Warren Buffett

HIRECT 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 HIRECT's volatility from 24 Oct, 2018 to 6 Dec, 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 HIRECT has significant negative skewness in it's return distribution. This indicates that HIRECT is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in HIRECT you may find it interesting to know that LTTS and BATAINDIA are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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