208.55 +3.1 (+1.48%) Sell

VEDL investors considering profit booking at current levels

13 min read

VEDANTA LIMITED ranked better than it's peers today. It delivered +1.48% to close at 208.55. During the last week it delivered +4.64%.

[Themes containing VEDL]

VEDL is currently in a bearish trend. Over the last three months trading short signals has not been a profitable strategy for VEDL's investors in general. However, this strategy had significantly lower risk when compared to Buy-and-Hold investing (which returned -2.14%). It is therefore better to tread with caution in the current downtrend by limiting your allocation to VEDL.


VEDL has been outperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 3 Feb, 2016 to 1 Nov, 2017. Over the last 2 years and 12 months, VEDL outperformed the NIFTY-50 index on 49% days. Which indicates that on days VEDL 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 VEDL was mostly profitable and delivered on average 0.0% per day. It's best return during this period (of +6.69%) was on Friday, 2 Nov, 2018. While it's worst loss in the same period (of -11.6%) was on Monday, 8 Oct, 2018. The longest stort-term trends during this period were 6 profitable and losing days. The bullish trend (which returned +8.05%) started on 11 Dec, 2018 and went on till 18 Dec, 2018 while the bearish trend (which returned -9.02%) started on 20 Nov, 2018 and went on till 28 Nov, 2018.

The last 12 months saw VEDL's investors making profits in 6 months and incurring losses in 6 months. During the last year, VEDL and NIFTY-50 index had the same number of profitable months. VEDL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, May 2018, returned -17.8% compared to -6.42% returned by NIFTY-50 index in Sep 2018. VEDL had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from May 2018 to Jul 2018) during which period it delivered -30.95%.

Invest like a bull, sit like a bear and watch like an eagle. (mantra for long term investing)
-- Vijay Kedia

VEDL is currently seeing overall fall in volatility. In comparison, the NIFTY-50 index is seeing decrease in volatility. During the last three months, there was a significant surge in VEDL's volatility from 19 Sep, 2018 to 8 Oct, 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 VEDL has significant negative skewness in it's return distribution. This indicates that VEDL is very risky for short-term investment and can significantly underperform for long durations.

Investors trading in VEDL derivatives at this moment can consider 'Married Call' options strategy to receive better risk-adjusted returns.

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

Based on your interest in VEDL you may find it interesting to know that IGARASHI, NIFTY50-DIV-POINT and ~HOMEAPPLIANCES are all extremely risky investment candidates that must be evaluated carefully. Investors with low risk profile are better off avoiding them till their performance becomes more consistent.

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