NTPC shows sign of weakness as investors do cost averaging

NTPC LTD ranked better than it's peers on Tuesday. It delivered +1.1% to close at 147.7. It is currently trading -16% below it's 52 week high of 176.16.

[Themes containing NTPC]

Buy-and-Hold investors in NTPC experienced a maximum drawdown of -19.88% over the last three months. It fell by -12.68% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +9.33%.

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NTPC has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 17 Jan, 2017 to 30 Nov, 2018. Over the last 2 years and 12 months, NTPC underperformed the NIFTY-50 index on 50% days. Which indicates that on days NTPC underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

During the last three months NTPC was mostly loss making and delivered on average -0.22% per day. It's best return during this period (of +3.28%) was on Monday, 3 Dec, 2018. While it's worst loss in the same period (of -2.85%) was on Monday, 5 Nov, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 11 Dec, 2018 and went on till 18 Dec, 2018. This bullish trend returned +8.18% to investors.

During the last year NTPC had 5 profitable months and 7 loss making months. NTPC returned profits in fewer months than NIFTY-50 index. NTPC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Nov 2018, returned -12.12% compared to -6.42% returned by NIFTY-50 index in Sep 2018. NTPC had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -19.33%.

Money is multiplied in practical value depending on the number of W's you control in your life: what you do, when you do it, where you do it, and with whom you do it.
-- Timothy Ferriss

NTPC 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 NTPC's volatility from 21 Sep, 2018 to 12 Nov, 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 NTPC 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 NTPC derivatives at this moment can consider 'Covered Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in NTPC you may find it interesting to know that LTTS, LTI and CUB are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.