37.2 +0.05 (+0.13%) Buy

Profit booking on the minds of PENIND investors as it shows marginal outperformance

13 min read

PENNAR INDUSTRIES LTD managed to marginally outperform the broader market on Wednesday. It gained +0.13% to close at 37.2. On a day when the overall market breadth was 70%, it closed higher than 42% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0084%.

[Themes containing PENIND]

Buy-and-Hold investors in PENIND experienced a maximum drawdown of -17.02% over the last three months. It lost -1.59% during this down trending period. There were both Long and Short signals during this period, where the short signals were marginally more profitable than the long signals.


PENIND has been underperforming the NIFTY-50 index in recent time, after having outperformed till 12 Jan, 2016. Over the last 3 years and 1 month, PENIND underperformed the NIFTY-50 index on 55% days.

PENIND returned losses on 56% days in the last three months. During this time, it delivered on average 0.0% per day. It delivered it's best daily return of +12.8%, during this period, on Wednesday, 9 Jan, 2019. There was initially a bullish trend during this period which started on 31 Oct, 2018 and went on till 12 Nov, 2018. The bullish trend returned +13.55% to investors. This was followed by a bearish trend that started on 13 Nov, 2018 and ended on 19 Nov, 2018. This bearish trend lost -12.11% of investor capital.

PENIND had 4 profitable and 8 loss making months over the last year. During the last year, number of profitable months of PENIND and NIFTY-50 index were the same. PENIND significantly outperformed NIFTY-50 index in Apr 2018, when it returned +19.02% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. PENIND and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both PENIND and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.
-- Warren Buffett

PENIND 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 surge in PENIND's volatility from 20 Dec, 2018 to 10 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 PENIND has significant negative skewness in it's return distribution. This indicates that PENIND is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in PENIND), three large cap instruments that deserve special mention are BAJFINANCE, TORNTPHARM and BAJAJFINSV. They have all outperformed the market and must be closely watched for investment opportunities.

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