RELIANCE investors not showing any loss of confidence as it pauses to catch its breath

RELIANCE INDUSTRIES LTD underperformed broader market on Tuesday. It returned -0.21% to close at 1235.15. On a day when the overall market breadth was 70%, it closed higher than 65% of the market. In comparison, the benchmark NIFTY-50 index closed today at -0.0036%.

[Themes containing RELIANCE]

Buy-and-Hold investors in RELIANCE experienced a maximum drawdown of -6.79% over the last three months. It returned +17.11% during this strong up trending period. There were both Long and Short signals during this period, while the long signals were significantly more profitable than the short signals.

Trend

Monthly Performance

Alpha (outperformance)

Heatmap

Volatility

Return distribution

RELIANCE has been outperforming the NIFTY-50 index in recent time. Over the last 3 years and 1 month, RELIANCE outperformed the NIFTY-50 index on 51% days.

During the last three months RELIANCE was mostly profitable and delivered on average +0.26% per day. It's best return during this period (of +4.5%) was on Monday, 21 Jan, 2019. While it's worst loss in the same period (of -3.84%) was on Monday, 10 Dec, 2018. There was initially a bullish trend during this period which started on 2 Nov, 2018 and went on till 7 Nov, 2018. The bullish trend returned +5.07% to investors. This was followed by a bearish trend that started on 31 Dec, 2018 and ended on 3 Jan, 2019. This bearish trend lost -2.93% of investor capital.

On monthly basis, RELIANCE delivered profits in more months over the last year, than losses. RELIANCE delivered profits in more months than NIFTY-50 index. RELIANCE significantly outperformed NIFTY-50 index in Jul 2018, when it returned +23.46% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. RELIANCE had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Jun 2018 to Sep 2018) during which period it delivered +35.7%. It is interesting to note that both RELIANCE and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Buy at the point of maximum pessimism; sell at the point of maximum optimism.
-- Sir John Templeton

RELIANCE is becoming more 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 RELIANCE's volatility from 29 Oct, 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 RELIANCE 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 RELIANCE derivatives at this moment can consider 'Bear Put Spread' options strategy to receive better risk-adjusted returns.

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

Based on your interest in RELIANCE you may find it interesting to know that HATSUN and LTI are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.