MM FORGINGS LTD

643.45 -10.72 (-1.67%) Buy

Want to invest in MMFL? Wait as it delivered lacklustre performance

13 min read

MM FORGINGS LTD is a falling knife that can bleed you if you catch it on Friday. It returned -1.67% to close at 643.45. It is currently trading +37% above it's 52 week low of 467.25 and is down only -10% from it's 52 week high.

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MMFL showed a up trend over the last 3 months. During this period MMFL returned +2.32% and saw a maximum drawdown of -16.49%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MMFL till volatility reduces and a clear trend emerges.

Trend

MMFL has been outperforming the NIFTY-50 index in recent time. Over the last 2 years 11 months and 13 days, MMFL outperformed the NIFTY-50 index on 50% days. Which indicates that on days MMFL 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 MMFL delivered losses on 52% days. However, it still managed to end this period in a profit. It's best return during this period (of +7.98%) was on Wednesday, 10 Oct, 2018. While it's worst loss in the same period (of -5.58%) was on Friday, 5 Oct, 2018. There was initially a bullish trend during this period which started on 19 Oct, 2018 and went on till 24 Oct, 2018. The bullish trend returned +4.18% to investors. This was followed by a bearish trend that started on 25 Oct, 2018 and ended on 1 Nov, 2018. This bearish trend lost -7.53% of investor capital.

On monthly basis, MMFL delivered losses in more months over the last year, than profits. MMFL delivered profits less regularly than NIFTY-50 index. MMFL significantly outperformed NIFTY-50 index in Jun 2018, when it returned +11.6% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. MMFL had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Jul 2018 to Oct 2018) during which period it delivered -9.17%.

Too many people spend money they earned..to buy things they don't want..to impress people that they don't like.
-- Will Rogers

MMFL 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 MMFL's volatility from 8 Oct, 2018 to 3 Dec, 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 MMFL 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.

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

On a general note (since you are interested in MMFL), three small cap instruments that deserve special mention are RESPONIND, NIITTECH and VIPIND. They have all outperformed the market and must be closely watched for investment opportunities.

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