735.05 -7.38 (-1.0%) Sell

Stop-loss on the minds of TATASPONGE investors as it performed worse than the broader market

13 min read

TATA SPONGE IRON LIMITED underperformed on Wednesday. It returned -1.0% to close at 735.05 which is it's 52 week low, down -37% from it's 52 week high.

[Themes containing TATASPONGE]

Buy-and-Hold investors in TATASPONGE experienced a maximum drawdown of -14.72% over the last three months. It returned -8.99% during this down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals. The net profit from Short signals was +2.42%.


TATASPONGE has been underperforming the NIFTY-50 index in recent time, after having outperformed till 15 Jan, 2018. Over the last 3 years and 1 month, TATASPONGE outperformed the NIFTY-50 index on 46% days. Which indicates that on days TATASPONGE outperforms the NIFTY-50 index, it's performance is marginally better than on the days it underperforms the NIFTY-50 index.

During the last three months TATASPONGE was mostly loss making and delivered on average -0.14% per day. It's best return during this period (of +3.43%) was on Thursday, 20 Dec, 2018. While it's worst loss in the same period (of -4.34%) was on Monday, 14 Jan, 2019. There was initially a bullish trend during this period which started on 17 Dec, 2018 and went on till 24 Dec, 2018. The bullish trend returned +12.21% to investors. This was followed by a bearish trend that started on 31 Dec, 2018 and ended on 8 Jan, 2019. This bearish trend lost -6.17% of investor capital.

On monthly basis, TATASPONGE delivered losses in more months over the last year, than profits. TATASPONGE delivered profits less regularly than NIFTY-50 index. TATASPONGE was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -16.06% compared to -6.42% returned by NIFTY-50 index in Sep 2018. TATASPONGE had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Sep 2018 to Nov 2018) during which period it delivered -19.16%.

Too many people spend money they earned..to buy things they don't want..to impress people that they don't like.
-- Will Rogers

TATASPONGE 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 TATASPONGE's volatility from 24 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 TATASPONGE has significant negative skewness in it's return distribution. This indicates that TATASPONGE is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in TATASPONGE), three instruments that deserve special mention are BAJFINANCE, BRITANNIA and NIFTY-GS-15YRPLUS. They have all outperformed the market and must be closely watched for investment opportunities.

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