Doubt in the minds of NHPC investors as it ranked among the worst performers
18 Jan, 201913 min read
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NHPC LTD significantly underperformed today. It fell by -1.57% to close at 25.15. It's recent 5 day performance has been -1.16%, +1.17%, +0.59%, -0.39% and -0.2%.
NHPC is currently in a bearish trend. The current bearish signal has generated a profit of +3.08% for investors in the last three months.
NHPC has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 20 Jan, 2016 to 21 Jun, 2017. Over the last 3 years and 1 month, NHPC outperformed the NIFTY-50 index on 47% days. Which indicates that on days NHPC outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.
NHPC returned losses on 58% days in the last three months. During this time, it delivered on average +0.06% per day. It delivered it's best daily return of +6.01%, during this period, on Friday, 9 Nov, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 5 Nov, 2018 and went on till 14 Nov, 2018. This bullish trend returned +10.91% to investors.
During the last year NHPC had 7 profitable months and 5 loss making months. NHPC returned profits in more months than NIFTY-50 index. NHPC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Jun 2018, returned -11.63% compared to -6.42% returned by NIFTY-50 index in Sep 2018. NHPC had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered +12.4%. It is interesting to note that both NHPC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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NHPC 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 NHPC's volatility from 19 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 NHPC has significant positive skewness in it's return distribution. This indicates that investors can expect NHPC to recover from drawdowns quickly. Which makes NHPC a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
Investors trading in NHPC derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.
NHPC has more chance of extreme outcomes than the NIFTY-50 index. Therefore, NHPC must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than NHPC.
Based on your interest in NHPC you may find it interesting to know that SRIPIPES and HATSUN are highly volatile and therefore risky. Investors should consider limiting their exposure to these instruments (because of their volatile nature).
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