174.75 +0.8 (+0.46%) Sell

TATAMOTORS shows sign of weakness as investors do cost averaging

13 min read

TATA MOTORS LIMITED managed to marginally outperform the broader market today. It gained +0.46% to close at 174.75. It's recent 5 day performance has been +4.19%, +0.06%, +1.68%, +3.8% and +0.64%.

[Themes containing TATAMOTORS]

TATAMOTORS showed a strong down trend over the last 3 months. During this period TATAMOTORS lost -30.82% and saw a maximum drawdown of -37.81%. There was a short signal during this period which returned +27.25%.


TATAMOTORS has been underperforming the NIFTY-50 index in recent time, after having outperformed till 6 Sep, 2016. Over the last 2 years and 12 months, TATAMOTORS underperformed the NIFTY-50 index on 53% days.

TATAMOTORS returned losses on 55% days in the last three months. During this time, it delivered on average -0.57% per day. It delivered it's worst daily return of -13.19%, during this period, on Tuesday, 9 Oct, 2018. There was initially a bearish trend during this period which started on 3 Oct, 2018 and went on till 9 Oct, 2018. The trend delivered -20.8% losses to investors. This was followed by a bullish trend that started on 26 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +14.35% to investors.

TATAMOTORS had 3 profitable and 9 loss making months over the last year. During the last year, TATAMOTORS underperformed NIFTY-50 index on monthly return basis. TATAMOTORS was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -21.91% compared to -6.42% returned by NIFTY-50 index in Sep 2018. TATAMOTORS had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -28.11%. It is interesting to note that both TATAMOTORS and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.
-- Johann Wolfgang von Goethe

TATAMOTORS 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 surge in TATAMOTORS's volatility from 19 Sep, 2018 to 21 Sep, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 21 Sep, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that TATAMOTORS has positive skewness in it's return distribution. This indicates that investors can expect TATAMOTORS to make attempts to recover from drawdowns quickly. Which makes TATAMOTORS a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

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

On a general note (since you are interested in TATAMOTORS), three small cap instruments that deserve special mention are IGARASHI, VINATIORGA and NIITTECH. They have all outperformed the market and must be closely watched for investment opportunities.

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