TRANSPORT CORPN OF INDIA delivered lacklustre performance on Friday. It delivered -0.2% to close at 292.65. On a day when the overall market breadth was 71%, it closed higher than 64% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.02%.
TCI showed a strong bullish trend over the last 3 months. During this period TCI delivered +15.92% and saw a maximum drawdown of -9.64%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in TCI till volatility reduces and a clear trend emerges.
TCI has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 29 Jul, 2016 to 30 Jan, 2017. Over the last 3 years and 1 month, TCI underperformed the NIFTY-50 index on 52% days.
During the last three months TCI was mostly profitable and delivered on average +0.25% per day. It's best return during this period (of +4.77%) was on Wednesday, 24 Oct, 2018. While it's worst loss in the same period (of -3.56%) was on Thursday, 1 Nov, 2018. The longest stort-term trend during this period was 5 profitable days, which started on 13 Nov, 2018 and went on till 19 Nov, 2018. This bullish trend returned +4.33% to investors.
The last 12 months saw TCI's investors making profits in 6 months and incurring losses in 6 months. During the last year, TCI delivered profits in more months than NIFTY-50 index. TCI significantly outperformed NIFTY-50 index in Aug 2018, when it returned +29.37% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. TCI and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both TCI and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.
Be quick in cutting your loses but not profits
-- Abhishek Shukla
TCI is currently seeing overall increase in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant fall in TCI's volatility from 22 Oct, 2018 to 18 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 TCI has significant positive skewness in it's return distribution. This indicates that investors can expect TCI to recover from drawdowns quickly. Which makes TCI a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.
NIFTY-50 index has more chance of extreme outcomes than TCI. Therefore, NIFTY-50 must receive a lower allocation than TCI in your portfolio. TCI usually has shorter drawdown period than the NIFTY-50 index.
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