1230.6 -1.45 (-0.12%) Buy

RELIANCE investors re-evaluating their investment strategy

13 min read

RELIANCE INDUSTRIES LTD trailed the broader market today. It delivered -0.12% to close at 1230.6. It's recent 5 day performance has been +1.2%, +0.56%, -0.53%, -0.71% and -2.17%.

RELIANCE is currently in a bullish trend. The current bullish signal has generated a profit of +23.25% for RELIANCE's investors in the last three months.


RELIANCE has been outperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 6 Sep, 2016 to 28 Aug, 2018. Over the last 2 years and 9 months, RELIANCE outperformed the NIFTY-50 index on 52% days.

During the last three months RELIANCE was mostly profitable and delivered on average +0.35% per day. It's best return during this period (of +4.19%) was on Thursday, 12 Jul, 2018. While it's worst loss in the same period (of -2.59%) was on Thursday, 5 Jul, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 17 Aug, 2018 and went on till 28 Aug, 2018. This bullish trend returned +9.48% to investors.

The last 12 months saw RELIANCE's investors making profits in 6 months and incurring losses in 6 months. During the last year, RELIANCE and NIFTY-50 index had the same number of profitable months. 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 3 straight months (from Jun 2018 to Aug 2018) during which period it delivered +34.39%. 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 currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing increase in volatility. During the last three months, there was a significant surge in RELIANCE's volatility from 25 Jun, 2018 to 12 Jul, 2018. While there was a significant surge in the NIFTY-50 index's volatility from 21 Aug, 2018 to 25 Sep, 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 'Calendar 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 MINDTREE is a mid cap that has shown remarkable performance and deserves to be on every investors' watchlist.

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