Psu Banks THEME

547.544 -10.27 (-1.87%) Sell

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Are you evaluating investing in BANKSPSU THEME? Wait as it ranked worse than it's peers

14 min read

PSU Banks ranked worse than it's peers on Friday. It lost -1.87% to close at 547.544. It is currently trading -34% below it's 52 week high of 831.56.

[Theme constituents]

~BANKSPSU showed a strong up trend over the last 3 months. During this period ~BANKSPSU grew by +22.74% and saw a maximum drawdown of -8.99%. There were 2 long signals during this period that returned a cumulative of +10.5% to investors.


~BANKSPSU has been underperforming the NIFTY-50 index in recent time, after having outperformed till 4 May, 2017. Over the last 3 years and 1 month, ~BANKSPSU underperformed the NIFTY-50 index on 54% days.

During the last three months ~BANKSPSU delivered losses on 54% days. However, it still managed to end this period in a profit. It's best return during this period (of +6.92%) was on Monday, 29 Oct, 2018. While it's worst loss in the same period (of -2.75%) was on Monday, 12 Nov, 2018. There was initially a bullish trend during this period which started on 26 Oct, 2018 and went on till 31 Oct, 2018. The bullish trend returned +14.11% to investors. This was followed by a bearish trend that started on 4 Dec, 2018 and ended on 10 Dec, 2018. This bearish trend lost -6.42% of investor capital.

~BANKSPSU had 5 profitable and 7 loss making months over the last year. During the last year, number of profitable months of ~BANKSPSU and NIFTY-50 index were the same. ~BANKSPSU was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -22.94% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~BANKSPSU and NIFTY-50 index, both had periods of 2 consecutive profitable months. It is interesting to note that both ~BANKSPSU and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

"Great businesses produce great results

~BANKSPSU 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 surge in ~BANKSPSU's volatility from 26 Oct, 2018 to 30 Oct, 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 ~BANKSPSU has significant negative skewness in it's return distribution. This indicates that ~BANKSPSU is very risky for short-term investment and can significantly underperform for long durations.

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

On a general note (since you are interested in ~BANKSPSU), two large cap instruments that deserve special mention are INFY and TCS. They have significantly outperformed the overall market.

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