1073.25 -10.06 (-0.94%) Buy

VTL investors doing a reality check

13 min read

VARDHMAN TEXTILES LIMITED trailed the broader market today. It lost -0.94% to close at 1073.25. It's recent 5 day performance has been +1.02%, -0.58%, -2.34%, +1.91% and -0.74%.

[Themes containing VTL]

VTL is currently in a up trend. The previous long signal in VTL has not been profitable for investors in general. If you are invested in VTL at current levels please make sure that your allocation is limited and that your portfolio is well diversified.


VTL has been underperforming the NIFTY-50 index in recent time, after having outperformed till 21 Feb, 2017. Over the last 3 years and 1 month, VTL outperformed the NIFTY-50 index on 49% days. Which indicates that on days VTL 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 VTL delivered losses on 56% days. However, it still managed to end this period in a profit. It's best return during this period (of +8.22%) was on Monday, 31 Dec, 2018. While it's worst loss in the same period (of -4.51%) was on Friday, 21 Dec, 2018. There was initially a bullish trend during this period which started on 2 Nov, 2018 and went on till 6 Nov, 2018. The bullish trend returned +7.38% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 7 Dec, 2018. This bearish trend lost -1.64% of investor capital.

VTL had 6 profitable and 6 loss making months over the last year. VTL was profitable in more months than NIFTY-50 index. VTL was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Mar 2018, returned -9.43% compared to -6.42% returned by NIFTY-50 index in Sep 2018. VTL had a longer winning streak of losing months than NIFTY-50 index. It went down in 4 straight months (from Jun 2018 to Sep 2018) during which period it delivered -18.75%. It is interesting to note that both VTL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"Finance is wholly different from the rest the economy.

VTL is becoming more 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 VTL's volatility from 6 Dec, 2018 to 31 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 VTL has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

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

Based on your interest in VTL you may find it interesting to know that BRITANNIA and ~MUTHOOTGRP have both shown remarkable performance and deserve to be on every investors' watchlist.

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