SPARC investors looking to preserve capital
18 Jan, 201913 min read
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SUN PHARMA ADV.RES.CO.LTD ranked among the worst performers on Friday. It returned -13.66% to close at 148.25. On a day when the overall market breadth was 71%, it closed higher than 41% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
SPARC is currently in a down trend. The current bearish signal has generated a profit of +50.75% for investors in the last three months.
SPARC has been underperforming the NIFTY-50 index in recent time, after having outperformed till 28 Dec, 2017. SPARC is currently at it's worst performance to the NIFTY-50 index and therefore does not make a good investment candidate. Over the last 3 years and 1 month, SPARC underperformed the NIFTY-50 index on 57% days.
During the last three months SPARC was mostly loss making and delivered on average -1.1% per day. It's best return during this period (of +3.92%) was on Wednesday, 12 Dec, 2018. While it's worst loss in the same period (of -13.66%) was on Friday, 18 Jan, 2019. There was initially a bullish trend during this period which started on 24 Oct, 2018 and went on till 25 Oct, 2018. The bullish trend returned +2.61% to investors. This was followed by a bearish trend that started on 19 Dec, 2018 and ended on 31 Dec, 2018. This bearish trend lost -10.79% of investor capital.
On monthly basis, SPARC delivered losses in more months over the last year, than profits. SPARC delivered profits less regularly than NIFTY-50 index. SPARC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Dec 2018, returned -27.67% compared to -6.42% returned by NIFTY-50 index in Sep 2018. SPARC had a longer winning streak of losing months than NIFTY-50 index. It went down in 5 straight months (from Sep 2018 to Jan 2019) during which period it delivered -87.5%. It is interesting to note that both SPARC and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
"Our incomes are like our shoes; if too small, they gall and pinch us; but if too large, they cause us to stumble and to trip.
SPARC 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 surge in SPARC's volatility from 7 Nov, 2018 to 11 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 SPARC has significant negative skewness in it's return distribution. This indicates that SPARC is very risky for short-term investment and can significantly underperform for long durations.
NIFTY-50 index has more chance of extreme outcomes than SPARC. Therefore, NIFTY-50 must receive a lower allocation than SPARC in your portfolio. NIFTY-50 index usually has shorter drawdown period than SPARC.
On a general note (since you are interested in SPARC), BRITANNIA has performed really well and deserves to be closely tracked for investment opportunities.
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