59.4 -2.17 (-3.65%) Sell

MEGH is a falling knife, continues to bleed every investor trying to catch it

13 min read

MEGHMANI ORGANICS LTD. was among the worst performers on Friday. It delivered -3.65% to close at 59.4. It is currently trading -49% below it's 52 week high of 118.35.

[Themes containing MEGH]

Buy-and-Hold investors in MEGH experienced a maximum drawdown of -28.75% over the last three months. It delivered -21.01% during this strong bearish trending period. There were no long signals during this period, where the short signal generated good profits of +21.01% for investors.


MEGH has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 18 Jan, 2016 to 6 Nov, 2017. Over the last 3 years and 1 month, MEGH outperformed the NIFTY-50 index on 45% days. Which indicates that on days MEGH outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

During the last three months MEGH was mostly loss making and delivered on average -0.33% per day. It's best return during this period (of +6.87%) was on Monday, 5 Nov, 2018. While it's worst loss in the same period (of -14.69%) was on Thursday, 1 Nov, 2018. The longest stort-term trend during this period was 7 losing days, which started on 2 Jan, 2019 and ended on 10 Jan, 2019. This bearish trend lost -6.89% of investor capital.

The last 12 months saw MEGH's investors making profits in 3 months and incurring losses in 9 months. MEGH was less consistent in delivering monthly returs than NIFTY-50 index. MEGH was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Nov 2018, returned -17.74% compared to -6.42% returned by NIFTY-50 index in Sep 2018. MEGH had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Aug 2018 to Nov 2018) during which period it delivered -35.41%. It is interesting to note that both MEGH and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

The speed of your success is limited only by your dedication and what you're willing to sacrifice.
-- Nathan W. Morris

MEGH 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 fall in MEGH's volatility from 22 Oct, 2018 to 1 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 MEGH has significant negative skewness in it's return distribution. This indicates that MEGH is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in MEGH you may find it interesting to know that VINATIORGA and RESPONIND are both small caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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