Don't consider buying MPSLTD now, it is risky at the moment
18 Jan, 201913 min read
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MPS LIMITED performed worse than the broader market today. It lost -0.92% to close at 487.2. It's recent 5 day performance has been -0.33%, +0.29%, +0.58%, +2.11% and -0.35%.
MPSLTD showed a down trend over the last 3 months. During this period MPSLTD lost -1.26% and saw a maximum drawdown of -11.66%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MPSLTD till volatility reduces and a clear trend emerges.
MPSLTD has been underperforming the NIFTY-50 index in recent time, after having outperformed till 7 Jan, 2016. Over the last 3 years and 1 month, MPSLTD underperformed the NIFTY-50 index on 52% days.
During the last three months MPSLTD was mostly loss making and delivered on average -0.01% per day. It's best return during this period (of +5.12%) was on Thursday, 22 Nov, 2018. While it's worst loss in the same period (of -2.74%) was on Friday, 9 Nov, 2018. There was initially a bullish trend during this period which started on 24 Oct, 2018 and went on till 2 Nov, 2018. The bullish trend returned +8.69% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 11 Dec, 2018. This bearish trend lost -3.3% of investor capital.
MPSLTD had 4 profitable and 8 loss making months over the last year. During the last year, MPSLTD underperformed NIFTY-50 index on monthly return basis. MPSLTD significantly outperformed NIFTY-50 index in Apr 2018, when it returned +32.04% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. MPSLTD had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from May 2018 to Sep 2018) during which period it delivered -22.72%. It is interesting to note that both MPSLTD and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich.
MPSLTD 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 MPSLTD's volatility from 22 Oct, 2018 to 10 Dec, 2018. 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 MPSLTD has significant negative skewness in it's return distribution. This indicates that MPSLTD is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than MPSLTD. Therefore, NIFTY-50 must receive a lower allocation than MPSLTD in your portfolio. NIFTY-50 index usually has shorter drawdown period than MPSLTD.
On a general note (since you are interested in MPSLTD), three instruments that are extremely volatile are IEX, IGARASHI and HATSUN. They must all be evaluated prudently and investors are better off avoiding them at the moment.
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