IDFC LIMITED delivered lacklustre performance on Friday. It lost -1.03% to close at 43.15. On a day when the overall market breadth was 71%, it closed higher than 18% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
IDFC is currently in a up trend. Over the last three months Buy-and-Hold has been a better strategy (returning +15.99%) for IDFC's investors than trading long signals.
IDFC was profitable on 57% days in the last three months. During this time, it delivered on average +0.26% per day. It delivered it's worst daily return of -5.48%, during this period, on Wednesday, 5 Dec, 2018. There was initially a bullish trend during this period which started on 21 Nov, 2018 and went on till 28 Nov, 2018. The bullish trend returned +8.0% to investors. This was followed by a bearish trend that started on 5 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -10.04% of investor capital.
IDFC had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of IDFC and NIFTY-50 index were the same. IDFC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -24.5% compared to -6.42% returned by NIFTY-50 index in Sep 2018. IDFC and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both IDFC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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IDFC 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 surge in IDFC's volatility from 21 Nov, 2018 to 20 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 IDFC has positive skewness in it's return distribution. This indicates that investors can expect IDFC to make attempts to recover from drawdowns quickly. Which makes IDFC a good candidate for momentum based trading on short-term bullish trends or counter-trends.
Investors trading in IDFC 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 IDFC. Therefore, NIFTY-50 must receive a lower allocation than IDFC in your portfolio. IDFC usually has shorter drawdown period than the NIFTY-50 index.
On a general note (since you are interested in IDFC), three small cap instruments that deserve special mention are NIITTECH, IGARASHI and ASTRAZEN. They have all outperformed the market and must be closely watched for investment opportunities.
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