Capital Goods THEME

1432.1 -7.59 (-0.53%) Buy

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Don't lose faith in CAPITALGOODS THEME now, it delivered good returns

14 min read

~CAPITALGOODS showed marginal outperformance today. On a longer term basis, investors in Capital Goods made +0.06% per day. Friday's performance of -0.53% was a underperformance compared to it's daily average.

[Theme constituents]

~CAPITALGOODS showed a bearish trend over the last 3 months. During this period ~CAPITALGOODS fell by -1.34% and saw a maximum drawdown of -10.91%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in ~CAPITALGOODS till volatility reduces and a clear trend emerges.

Trend

~CAPITALGOODS has been outperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 2 Mar, 2016 to 12 Jan, 2018. Over the last 2 years 11 months and 13 days, ~CAPITALGOODS outperformed the NIFTY-50 index on 51% days.

During the last three months ~CAPITALGOODS delivered profits on 50% days. However, it still managed to end this period in a loss. It's best return during this period (of +3.01%) was on Wednesday, 10 Oct, 2018. While it's worst loss in the same period (of -2.55%) was on Monday, 8 Oct, 2018. The longest stort-term trend during this period was 6 profitable days, which started on 26 Oct, 2018 and went on till 2 Nov, 2018. This bullish trend returned +6.74% to investors.

During the last year ~CAPITALGOODS had 7 profitable months and 5 loss making months. ~CAPITALGOODS returned profits in more months than NIFTY-50 index. ~CAPITALGOODS was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -9.83% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~CAPITALGOODS had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Oct 2018 to Dec 2018) during which period it delivered +5.25%. It is interesting to note that both ~CAPITALGOODS and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

I always said that if I wasn't studying psychopaths in prison, I'd do it at the stock exchange.
-- Robert D. Hare

~CAPITALGOODS 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 ~CAPITALGOODS's volatility from 17 Sep, 2018 to 12 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 ~CAPITALGOODS 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 ~CAPITALGOODS. Therefore, NIFTY-50 must receive a lower allocation than ~CAPITALGOODS in your portfolio. NIFTY-50 index usually has shorter drawdown period than ~CAPITALGOODS.

Based on your interest in ~CAPITALGOODS you may find it interesting to know that AARTIIND, HATSUN and LTTS are mid caps that have all shown remarkable performance and qualify to be on every investor's watchlist.

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