KALYANI STEELS LIMITED underperformed broader market on Tuesday. It returned -0.49% to close at 212.4. On a day when the overall market breadth was 70%, it closed higher than 77% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0036%.
KSL showed a down trend over the last 3 months. During this period KSL returned -5.09% and saw a maximum drawdown of -16.36%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in KSL till volatility reduces and a clear trend emerges.
During the last three months KSL was mostly loss making and delivered on average -0.07% per day. It's best return during this period (of +3.97%) was on Wednesday, 19 Dec, 2018. While it's worst loss in the same period (of -4.07%) was on Monday, 10 Dec, 2018. There was initially a bullish trend during this period which started on 31 Oct, 2018 and went on till 5 Nov, 2018. The bullish trend returned +11.86% to investors. This was followed by a bearish trend that started on 21 Nov, 2018 and ended on 29 Nov, 2018. This bearish trend lost -6.73% of investor capital.
On monthly basis, KSL delivered losses in more months over the last year, than profits. KSL delivered profits less regularly than NIFTY-50 index. KSL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -21.19% compared to -6.42% returned by NIFTY-50 index in Sep 2018. KSL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -23.45%. It is interesting to note that both KSL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"Investors must keep in mind that there's a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it .
KSL is becoming more 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 KSL's volatility from 23 Oct, 2018 to 5 Nov, 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 KSL has significant negative skewness in it's return distribution. This indicates that KSL is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than KSL. Therefore, NIFTY-50 must receive a lower allocation than KSL in your portfolio. NIFTY-50 index usually has shorter drawdown period than KSL.
Based on your interest in KSL you may find it interesting to know that SAGCEM, TINPLATE and SHIVAMAUTO have all performed similar to KSL and qualify as alternative investment candidates that must be evaluated for diversification.
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