MAGMA FINCORP LIMITED

106.5 +0.96 (+0.9%) Sell

MAGMA investors considering profit booking at current levels

13 min read

MAGMA FINCORP LIMITED delivered good returns on Friday. It grew by +0.9% to close at 106.5. On a day when the overall market breadth was 71%, it closed higher than 48% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.

[Themes containing MAGMA]

MAGMA is currently in a down trend. The previous short signal in MAGMA has not been profitable for investors in general. If you are short on MAGMA at current levels please make sure that your allocation is limited and that your portfolio is well diversified.

Trend

MAGMA has been underperforming the NIFTY-50 index in recent time, after having outperformed till 22 May, 2018. Over the last 3 years and 1 month, MAGMA underperformed the NIFTY-50 index on 52% days.

During the last three months MAGMA was mostly profitable and delivered on average +0.17% per day. It's best return during this period (of +6.78%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -6.4%) was on Monday, 10 Dec, 2018. There was initially a bullish trend during this period which started on 2 Nov, 2018 and went on till 9 Nov, 2018. The bullish trend returned +7.02% to investors. This was followed by a bearish trend that started on 6 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -12.59% of investor capital.

MAGMA had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of MAGMA and NIFTY-50 index were the same. MAGMA was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -24.83% compared to -6.42% returned by NIFTY-50 index in Sep 2018. MAGMA and NIFTY-50 index, both had periods of 2 consecutive profitable months.

I think that stocks have been this tremendous, tremendous equalizer for people in this country. Guys who can't make a lot of money at their jobs have been able to make a lot of money in the stock market.
-- Jim Cramer

MAGMA 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 fall in MAGMA's volatility from 19 Oct, 2018 to 11 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 MAGMA 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.

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

On a general note (since you are interested in MAGMA), two instruments that deserve special mention are LTTS and CUB. They have significantly outperformed the overall market this year.

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