682.85 -5.06 (-0.74%) Sell

VARROC investors looking to exit as part of sectoral rotation

13 min read

VARROC ENGINEERING LTD. delivered massive losses on Friday. It delivered -0.74% to close at 682.85. It is currently trading -40% below it's 52 week high of 1151.95.

Buy-and-Hold investors in VARROC experienced a maximum drawdown of -37.0% over the last three months. It delivered -33.71% during this strong bearish 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 +29.09%.


VARROC has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 4 Sep, 2018 to 11 Dec, 2018. Over the last 5 months and 8 days, VARROC underperformed the NIFTY-50 index on 58% days.

During the last three months VARROC was mostly loss making and delivered on average -0.63% per day. It's best return during this period (of +8.41%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -13.34%) was on Wednesday, 26 Sep, 2018. The longest stort-term trend during this period was 6 losing days, which started on 19 Oct, 2018 and ended on 26 Oct, 2018. This bearish trend lost -15.33% of investor capital.

The last 12 months saw VARROC's investors making profits in 1 months and incurring losses in 11 months. VARROC was less consistent in delivering monthly returs than NIFTY-50 index. VARROC was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -23.73% compared to -6.42% returned by NIFTY-50 index in Sep 2018. VARROC had a shorter streak of profitable months than NIFTY-50 index. It only went up in 6 straight months during the last year.

Financial security and independence are like a three-legged stool resting on savings, insurance and investments.
-- Brian Tracy

VARROC 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 surge in VARROC's volatility from 17 Sep, 2018 to 26 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 VARROC has positive skewness in it's return distribution. This indicates that investors can expect VARROC to make attempts to recover from drawdowns quickly. Which makes VARROC a good candidate for momentum based trading on short-term bullish trends or counter-trends.

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

Based on your interest in VARROC you may find it interesting to know that DMART has shown remarkable performance and deserves to be on every investors' watchlist.

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