Stop-loss on the minds of KEC investors as it underperforms

KEC INTL. LIMITED underperformed broader market today. It lost -0.15% to close at 274.45. During the last week it lost -1.77% and saw a maximum drawdown of -1.84% before bouncing back.

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Buy-and-Hold investors in KEC experienced a maximum drawdown of -11.94% over the last three months. It lost -1.47% during this down trending period. There were both Long and Short signals during this period, where the short signals were marginally more profitable than the long signals.

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KEC has been underperforming the NIFTY-50 index in recent time, after having outperformed till 18 Apr, 2018. Over the last 3 years and 1 month, KEC outperformed the NIFTY-50 index on 47% days. Which indicates that on days KEC outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

During the last three months KEC was mostly profitable and delivered on average -0.0% per day. It's best return during this period (of +4.43%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.48%) was on Monday, 5 Nov, 2018. There was initially a bullish trend during this period which started on 11 Dec, 2018 and went on till 19 Dec, 2018. The bullish trend returned +13.77% to investors. This was followed by a bearish trend that started on 20 Dec, 2018 and ended on 27 Dec, 2018. This bearish trend lost -7.87% of investor capital.

KEC had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of KEC and NIFTY-50 index were the same. KEC significantly outperformed NIFTY-50 index in Feb 2018, when it returned +18.24% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. KEC had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Aug 2018 to Oct 2018) during which period it delivered -12.0%. It is interesting to note that both KEC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

If you do chose to invest in a share, invest for the lifetime.
-- Sandeep Sahajpal

KEC 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 KEC's volatility from 22 Oct, 2018 to 18 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 KEC has significant negative skewness in it's return distribution. This indicates that KEC is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in KEC), two small cap instruments that deserve special mention are VINATIORGA and RESPONIND. They have significantly outperformed the overall market.