KECL investors herd to book profits while the going is good
23 Jan, 201913 min read
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KIRLOSKAR ELECTRIC CO LTD has destroyed investor wealth on Wednesday. It delivered -2.34% to close at 18.75. It is currently trading -59% below it's 52 week high of 46.05.
KECL is currently in a bullish trend. Over the last three months Buy-and-Hold has been a better strategy (returning +15.03%) for KECL's investors than trading long signals.
KECL has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 25 Oct, 2016 to 1 Oct, 2018. Over the last 3 years and 1 month, KECL underperformed the NIFTY-50 index on 55% days.
During the last three months KECL delivered losses on 61% days. However, it still managed to end this period in a profit. It's best return during this period (of +19.94%) was on Monday, 7 Jan, 2019. While it's worst loss in the same period (of -12.61%) was on Thursday, 10 Jan, 2019. The longest stort-term trend during this period was 5 losing days, which started on 4 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -6.31% of investor capital.
The last 12 months saw KECL's investors making profits in 4 months and incurring losses in 8 months. During the last year, KECL and NIFTY-50 index had the same number of profitable months. KECL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -26.71% compared to -6.42% returned by NIFTY-50 index in Sep 2018. KECL 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 -69.92%. It is interesting to note that both KECL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Many folks think they aren't good at earning money, when what they don't know is how to use it.
-- Frank A. Clark
KECL is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in KECL's volatility from 29 Oct, 2018 to 4 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 KECL has significant negative skewness in it's return distribution. This indicates that KECL is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than KECL. Therefore, NIFTY-50 must receive a lower allocation than KECL in your portfolio. NIFTY-50 index usually has shorter drawdown period than KECL.
Based on your interest in KECL you may find it interesting to know that KARURVYSYA and BATAINDIA are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.
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