NMDC LTD. performed worse than the broader market on Friday. It lost -1.25% to close at 90.7. On a day when the overall market breadth was 71%, it closed higher than 26% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
NMDC is currently in a down trend. The current bearish signal has generated a profit of +9.98% for investors in the last three months.
NMDC returned losses on 53% days in the last three months. During this time, it delivered on average -0.28% per day. It delivered it's worst daily return of -6.06%, during this period, on Friday, 16 Nov, 2018. There was initially a bearish trend during this period which started on 20 Nov, 2018 and went on till 22 Nov, 2018. The trend delivered -5.25% losses to investors. This was followed by a bullish trend that started on 14 Dec, 2018 and ended on 20 Dec, 2018. This bullish trend delivered +4.95% to investors.
NMDC had 4 profitable and 8 loss making months over the last year. During the last year, NMDC underperformed NIFTY-50 index on monthly return basis. NMDC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Nov 2018, returned -12.19% compared to -6.42% returned by NIFTY-50 index in Sep 2018. NMDC had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -14.28%. It is interesting to note that both NMDC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
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NMDC 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 NMDC's volatility from 19 Oct, 2018 to 18 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 NMDC 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.
Investors trading in NMDC derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.
NIFTY-50 index has more chance of extreme outcomes than NMDC. Therefore, NIFTY-50 must receive a lower allocation than NMDC in your portfolio. NIFTY-50 index usually has shorter drawdown period than NMDC.
On a general note (since you are interested in NMDC), three small cap instruments that deserve special mention are VINATIORGA, RESPONIND and NIITTECH. They have all outperformed the market and must be closely watched for investment opportunities.
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