476.05 -14.21 (-2.99%) Buy

LICHSGFIN investors herd to book profits while the going is good

14 min read

LIC HOUSING FINANCE LTD significantly underperformed on Friday. It lost -2.99% to close at 476.05. On a day when the overall market breadth was 71%, it closed higher than 53% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing LICHSGFIN]

LICHSGFIN is currently in a up trend. The current bullish signal has generated a profit of +4.93% for LICHSGFIN's investors in the last three months.


LICHSGFIN has been underperforming the NIFTY-50 index in recent time, after having outperformed till 13 Jun, 2017. Over the last 3 years and 1 month, LICHSGFIN underperformed the NIFTY-50 index on 50% days. Which indicates that on days LICHSGFIN underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

LICHSGFIN was profitable on 55% days in the last three months. During this time, it delivered on average +0.21% per day. It delivered it's best daily return of +4.52%, during this period, on Wednesday, 19 Dec, 2018. There was initially a bearish trend during this period which started on 22 Oct, 2018 and went on till 26 Oct, 2018. The trend delivered -4.29% losses to investors. This was followed by a bullish trend that started on 26 Nov, 2018 and ended on 29 Nov, 2018. This bullish trend delivered +3.1% to investors.

LICHSGFIN had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of LICHSGFIN and NIFTY-50 index were the same. LICHSGFIN was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -19.87% compared to -6.42% returned by NIFTY-50 index in Sep 2018. LICHSGFIN 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 -21.59%. It is interesting to note that both LICHSGFIN and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

A real entrepreneur is somebody who has no safety net underneath them.
-- Henry Kravis

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

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

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

On a general note (since you are interested in LICHSGFIN), two instruments that have been extremely volatile in recent times are ~HOMEAPPLIANCES and HATSUN. Investors in these instruments should consider reducing their exposure (to ~HOMEAPPLIANCES and HATSUN) and diversifying their portfolios.

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