Want to invest in RIIL? Consider as it performed better than the broader market
18 Jan, 201913 min read
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RELIANCE INDUSTRIAL INFRA performed better than the broader market today. It returned +0.62% to close at 338.75. It's recent 5 day performance has been -0.53%, +0.12%, +2.63%, -1.83% and -0.36%.
RIIL showed a up trend over the last 3 months. During this period RIIL returned +3.29% and saw a maximum drawdown of -14.69%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in RIIL till volatility reduces and a clear trend emerges.
RIIL has been underperforming the NIFTY-50 index in recent time, after having outperformed till 4 Jan, 2016. Over the last 3 years and 1 month, RIIL underperformed the NIFTY-50 index on 56% days.
During the last three months RIIL delivered losses on 54% days. However, it still managed to end this period in a profit. It's best return during this period (of +4.54%) was on Wednesday, 19 Dec, 2018. While it's worst loss in the same period (of -3.3%) was on Monday, 10 Dec, 2018. There was initially a bearish trend during this period which started on 3 Dec, 2018 and went on till 10 Dec, 2018. The trend delivered -10.63% losses to investors. This was followed by a bullish trend that started on 11 Dec, 2018 and ended on 19 Dec, 2018. This bullish trend delivered +12.42% to investors.
On monthly basis, RIIL delivered profits and losses in equal number of months. RIIL delivered profits in more months than NIFTY-50 index. RIIL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -28.13% compared to -6.42% returned by NIFTY-50 index in Sep 2018. RIIL had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Feb 2018 to May 2018) during which period it delivered -30.5%. It is interesting to note that both RIIL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Money is a terrible master but an excellent servant.
-- P.T. Barnum
RIIL 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 fall in RIIL's volatility from 22 Oct, 2018 to 4 Dec, 2018. 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 RIIL has significant negative skewness in it's return distribution. This indicates that RIIL is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than RIIL. Therefore, NIFTY-50 must receive a lower allocation than RIIL in your portfolio. NIFTY-50 index usually has shorter drawdown period than RIIL.
On a general note (since you are interested in RIIL), LTI has performed really well this year and deserves to be closely tracked for investment opportunities.
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