TATA COMMUNICATIONS LTD

520.05 -10.87 (-2.09%) Buy

Don't consider investing in TATACOMM now, it is risky at the moment

13 min read

TATA COMMUNICATIONS LTD significantly underperformed today. It returned -2.09% to close at 520.05. It's recent 5 day performance has been -0.01%, +3.03%, +0.53%, -0.74% and -0.26%.

[Themes containing TATACOMM]

TATACOMM showed a strong up trend over the last 3 months. During this period TATACOMM grew by +14.22% and saw a maximum drawdown of -7.23%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in TATACOMM till volatility reduces and a clear trend emerges.

Trend

TATACOMM has been underperforming the NIFTY-50 index in recent time, after having outperformed till 9 Feb, 2017. Over the last 3 years and 1 month, TATACOMM underperformed the NIFTY-50 index on 52% days.

During the last three months TATACOMM delivered losses on 51% days. However, it still managed to end this period in a profit. It's best return during this period (of +5.74%) was on Friday, 16 Nov, 2018. While it's worst loss in the same period (of -4.89%) was on Friday, 21 Dec, 2018. There was initially a bullish trend during this period which started on 29 Oct, 2018 and went on till 1 Nov, 2018. The bullish trend returned +11.31% to investors. This was followed by a bearish trend that started on 4 Jan, 2019 and ended on 14 Jan, 2019. This bearish trend lost -4.4% of investor capital.

On monthly basis, TATACOMM delivered losses in more months over the last year, than profits. TATACOMM delivered profits less regularly than NIFTY-50 index. TATACOMM significantly outperformed NIFTY-50 index in Nov 2018, when it returned +9.49% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. TATACOMM had a longer winning streak of losing months than NIFTY-50 index. It went down in 8 straight months (from Mar 2018 to Oct 2018) during which period it delivered -28.68%. It is interesting to note that both TATACOMM and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

A simple fact that is ard to learn is that the time to save money is when you have some.
-- Joe Moore

TATACOMM 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 TATACOMM's volatility from 19 Oct, 2018 to 15 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 TATACOMM 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 TATACOMM derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

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

On a general note (since you are interested in TATACOMM), two small cap instruments that deserve special mention are RESPONIND and IGARASHI. They have significantly outperformed the overall market.

Want to improve your Portfolio's performance?

Spotalpha's Portfolio optimizer is all you need to improve your returns and reduce your risk.
Optimize Portfolio NOW
If you liked what you read here ...

... we have a small favour to ask. Help us bring the power of algorithmic trading strategies to individual investors.

All content in this article was automatically generated by algorithms. This ensures that there are no human biases in the analysis provided. This approach to investing is not new and has been around for more than three decades. Yet, it has been available to only the most affluent or elite investors leaving individual investors to trade on emotions (such as fear and greed), intuition and poor analysis from third-parties. We want to change this.

We want to empower investors with all the tools and analysis required by them to make a rational investment decision.

If you found Spotalpha useful, consider making a contribution. For as little as $5 you can support our efforts and it takes less than a minute. Thank you. Contribute
Share with friends   WhatsApp   Facebook   Twitter