SHRIRAM TRANSPORT FIN CO.

1135.8 -13.54 (-1.19%) Sell

SRTRANSFIN continues its fall as more investors loose confidence

13 min read

SHRIRAM TRANSPORT FIN CO. underperformed on Friday. It returned -1.19% to close at 1135.8. It is currently trading -30% below it's 52 week high of 1633.0.

[Themes containing SRTRANSFIN]

SRTRANSFIN showed a strong up trend over the last 3 months. During this period SRTRANSFIN returned +12.48% and saw a maximum drawdown of -13.43%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in SRTRANSFIN till volatility reduces and a clear trend emerges.

Trend

SRTRANSFIN has been underperforming the NIFTY-50 index in recent time, after having outperformed till 26 Apr, 2018. Over the last 3 years and 1 month, SRTRANSFIN underperformed the NIFTY-50 index on 50% days. Which indicates that on days SRTRANSFIN underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

During the last three months SRTRANSFIN delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +6.24%) was on Wednesday, 19 Dec, 2018. While it's worst loss in the same period (of -5.26%) was on Friday, 21 Dec, 2018. There was initially a bearish trend during this period which started on 16 Nov, 2018 and went on till 27 Nov, 2018. The trend delivered -13.42% 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 +15.9% to investors.

On monthly basis, SRTRANSFIN delivered losses in more months over the last year, than profits. SRTRANSFIN delivered profits less regularly than NIFTY-50 index. SRTRANSFIN was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -13.84% compared to -6.42% returned by NIFTY-50 index in Sep 2018. SRTRANSFIN and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both SRTRANSFIN and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Wealth is the ability to fully experience life.
-- Henry David Thoreau

SRTRANSFIN 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 SRTRANSFIN's volatility from 31 Oct, 2018 to 16 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 SRTRANSFIN has significant negative skewness in it's return distribution. This indicates that SRTRANSFIN is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in SRTRANSFIN derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in SRTRANSFIN), three instruments that are extremely volatile are HATSUN, ~HOMEAPPLIANCES and SRIPIPES. They must all be evaluated prudently and investors are better off avoiding them at the moment.

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