IFCI LTD

14.6 -0.25 (-1.68%) Buy

Looking to invest in IFCI? Look for alternatives because it showed weakness

13 min read

IFCI LTD delivered massive losses on Friday. It fell by -1.68% to close at 14.6. On a day when the overall market breadth was 71%, it closed higher than 23% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing IFCI]

IFCI showed a strong bullish trend over the last 3 months. During this period IFCI surged by +11.88% and saw a maximum drawdown of -14.97%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in IFCI till volatility reduces and a clear trend emerges.

Trend

IFCI has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 3 Feb, 2017 to 28 Sep, 2018. Over the last 3 years and 1 month, IFCI underperformed the NIFTY-50 index on 55% days.

IFCI returned losses on 53% days in the last three months. During this time, it delivered on average +0.2% per day. It delivered it's best daily return of +6.69%, during this period, on Wednesday, 12 Dec, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 29 Oct, 2018 and went on till 2 Nov, 2018. This bullish trend returned +12.91% to investors.

During the last year IFCI had 3 profitable months and 9 loss making months. IFCI returned profits in fewer months than NIFTY-50 index. IFCI was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -31.21% compared to -6.42% returned by NIFTY-50 index in Sep 2018. IFCI had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Feb 2018 to Jun 2018) during which period it delivered -64.31%. It is interesting to note that both IFCI and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

I would not pre-pay. I would invest instead and let the investments cover it.
-- Dave Ramsey

IFCI 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 IFCI's volatility from 19 Oct, 2018 to 15 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 IFCI 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 IFCI derivatives at this moment can consider 'Married Put' options strategy to receive better risk-adjusted returns.

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

Based on your interest in IFCI you may find it interesting to know that BRITANNIA and TCS are both large caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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