149.9 -4.93 (-3.29%) Buy

IRB investors herd to book profits while the going is good

13 min read

IRB INFRA DEV LTD. has destroyed investor wealth on Friday. It returned -3.29% to close at 149.9. It is currently trading -46% below it's 52 week high of 279.15.

[Themes containing IRB]

IRB is currently in a up trend. The current bullish signal has generated a profit of +2.5% for IRB's investors in the last three months.


IRB has been underperforming the NIFTY-50 index in recent time, after having outperformed till 4 Jan, 2016. Over the last 3 years and 1 month, IRB underperformed the NIFTY-50 index on 52% days.

During the last three months IRB was mostly profitable and delivered on average +0.4% per day. It's best return during this period (of +10.62%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -6.08%) was on Friday, 16 Nov, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +19.51% to investors. This was followed by a bearish trend that started on 28 Nov, 2018 and ended on 3 Dec, 2018. This bearish trend lost -2.4% of investor capital.

On monthly basis, IRB delivered losses in more months over the last year, than profits. IRB delivered profits less regularly than NIFTY-50 index. IRB was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -27.9% compared to -6.42% returned by NIFTY-50 index in Sep 2018. IRB had a longer winning streak of losing months than NIFTY-50 index. It went down in 6 straight months (from May 2018 to Oct 2018) during which period it delivered -64.96%. It is interesting to note that both IRB and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Don't always trust what you see. In a bull market even a duck looks like a swan.
-- Vijay Kedia

IRB 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 IRB's volatility from 19 Oct, 2018 to 17 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 IRB has significant positive skewness in it's return distribution. This indicates that investors can expect IRB to recover from drawdowns quickly. Which makes IRB a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in IRB derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in IRB), two instruments that deserve special mention are ~MKTCAP201TO250 and ~CHEMICALS. They have significantly outperformed the overall market.

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