862.3 -6.4 (-0.74%) Buy

LUPIN investors not showing any loss of confidence as it pauses to catch its breath

13 min read

LUPIN LIMITED performed worse than the broader market on Friday. It delivered -0.74% to close at 862.3. On a day when the overall market breadth was 71%, it closed higher than 17% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing LUPIN]

Buy-and-Hold investors in LUPIN experienced a maximum drawdown of -9.82% over the last three months. It delivered -2.04% during this bearish trending period. There were both Long and Short signals during this period, where the short signals were marginally more profitable than the long signals.


LUPIN has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 9 Feb, 2016 to 10 Aug, 2018. Over the last 3 years and 1 month, LUPIN underperformed the NIFTY-50 index on 51% days.

During the last three months LUPIN delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.88%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -3.77%) was on Thursday, 1 Nov, 2018. The longest stort-term trends during this period were 5 profitable and losing days. The bullish trend (which returned +6.51%) started on 27 Nov, 2018 and went on till 3 Dec, 2018 while the bearish trend (which returned -10.2%) started on 4 Dec, 2018 and went on till 10 Dec, 2018.

The last 12 months saw LUPIN's investors making profits in 5 months and incurring losses in 7 months. During the last year, LUPIN and NIFTY-50 index had the same number of profitable months. LUPIN significantly outperformed NIFTY-50 index in Jun 2018, when it returned +17.44% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. LUPIN and NIFTY-50 index, both had periods of 2 consecutive losing months. It is interesting to note that both LUPIN and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"There is a huge amount of freedom that is derived from not fighting the market.

LUPIN is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in LUPIN's volatility from 19 Oct, 2018 to 14 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 LUPIN has significant positive skewness in it's return distribution. This indicates that investors can expect LUPIN to recover from drawdowns quickly. Which makes LUPIN a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in LUPIN derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in LUPIN you may find it interesting to know that ~CHEMICALS, NIFTY-GS-15YRPLUS and BAJFINANCE have all shown remarkable performance and qualify to be on every investor's watchlist.

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