MAHINDRA & MAHINDRA LTD

757.25 -1.94 (-0.26%) Sell

M&M continues its fall as more investors loose confidence

13 min read

M&M underperformed broader market today. On a longer term basis, investors in MAHINDRA & MAHINDRA LTD made +0.04% per day. Friday's performance of -0.26% was a underperformance compared to it's daily average.

[Themes containing M&M]

M&M showed a strong bearish trend over the last 3 months. During this period M&M fell by -20.36% and saw a maximum drawdown of -25.98%. There was a short signal during this period which returned +12.04%.

Trend

M&M has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 3 Nov, 2017 to 21 Sep, 2018. Over the last 2 years 11 months and 13 days, M&M underperformed the NIFTY-50 index on 51% days.

During the last three months M&M was mostly loss making and delivered on average -0.35% per day. It's best return during this period (of +5.25%) was on Friday, 12 Oct, 2018. While it's worst loss in the same period (of -6.65%) was on Monday, 24 Sep, 2018. The longest stort-term trend during this period was 4 losing days, which started on 27 Sep, 2018 and ended on 3 Oct, 2018. This bearish trend lost -11.82% of investor capital.

During the last year M&M had 7 profitable months and 5 loss making months. M&M returned profits in more months than NIFTY-50 index. M&M significantly outperformed NIFTY-50 index in Apr 2018, when it returned +16.91% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. M&M had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Mar 2018 to May 2018) during which period it delivered +24.1%. It is interesting to note that both M&M and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

You must gain control over your money or the lack of it will forever control you.
-- Dave Ramsey

M&M 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 surge in M&M's volatility from 17 Sep, 2018 to 24 Sep, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that M&M has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

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

Based on your interest in M&M you may find it interesting to know that CUB and EXCELINDUS have both shown remarkable performance this year and deserve to be on every investors' watchlist.

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