172.4 -0.35 (-0.2%) Sell

Search for alternative investments is on for OIL investors as it underperforms

14 min read

OIL INDIA LTD delivered lacklustre performance today. It delivered -0.2% to close at 172.4. During the last week it delivered -0.49% and saw a maximum drawdown of -1.54% before bouncing back.

[Themes containing OIL]

OIL is currently in a bearish trend. The current bearish signal has generated a profit of +15.01% for investors in the last three months.


OIL has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 10 Jan, 2017 to 18 Jan, 2019. One must note that OIL is currently at it's worst performance to the NIFTY-50 index which makes it a bad investment candidate. Over the last 3 years and 1 month, OIL underperformed the NIFTY-50 index on 49% days. Which indicates that on days OIL underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

OIL returned losses on 51% days in the last three months. During this time, it delivered on average -0.24% per day. It delivered it's worst daily return of -7.75%, during this period, on Friday, 30 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 +3.1% to investors.

The last 12 months saw OIL's investors making profits in 5 months and incurring losses in 7 months. During the last year, OIL and NIFTY-50 index had the same number of profitable months. OIL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -10.63% compared to -6.42% returned by NIFTY-50 index in Sep 2018. OIL had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Oct 2018 to Jan 2019) during which period it delivered -23.89%. It is interesting to note that both OIL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

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OIL is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in OIL's volatility from 25 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 OIL has significant positive skewness in it's return distribution. This indicates that investors can expect OIL to recover from drawdowns quickly. Which makes OIL a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in OIL derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in OIL you may find it interesting to know that LTI, RESPONIND and MERCK have all shown remarkable performance this year and deserve to be on every investor's watchlist.

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