Large Automobile THEME

1285.75 +8.06 (+0.63%) Sell

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LARGEAUTO THEME shows sign of weakness as investors do cost averaging

13 min read

Large Automobile managed to marginally outperform the broader market today. It gained +0.63% to close at 1285.75. During the last week it gained +5.6%.

[Theme constituents]

Buy-and-Hold investors in ~LARGEAUTO experienced a maximum drawdown of -17.37% over the last three months. It returned -12.61% during this strong down trending period. There were no long signals during this period, where the short signal generated good profits of +12.61% for investors.


~LARGEAUTO has been underperforming the NIFTY-50 index in recent time, after having outperformed till 9 Jan, 2018. Over the last 2 years 11 months and 13 days, ~LARGEAUTO underperformed the NIFTY-50 index on 46% days. Which indicates that on days ~LARGEAUTO underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

~LARGEAUTO was profitable on 50% days in the last three months. During this time, it delivered on average -0.21% per day. It delivered it's best daily return of +4.7%, during this period, on Friday, 2 Nov, 2018. There was initially a bearish trend during this period which started on 26 Sep, 2018 and went on till 28 Sep, 2018. The trend delivered -5.45% losses to investors. This was followed by a bullish trend that started on 26 Oct, 2018 and ended on 31 Oct, 2018. This bullish trend delivered +3.03% to investors.

On monthly basis, ~LARGEAUTO delivered losses in more months over the last year, than profits. ~LARGEAUTO delivered profits less regularly than NIFTY-50 index. ~LARGEAUTO was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -12.63% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~LARGEAUTO had a longer winning streak of losing months than NIFTY-50 index. It went down in 3 straight months (from Jan 2018 to Mar 2018) during which period it delivered -8.38%. It is interesting to note that both ~LARGEAUTO and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.
-- Warren Buffett

~LARGEAUTO 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 fall in ~LARGEAUTO's volatility from 12 Oct, 2018 to 4 Dec, 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 ~LARGEAUTO has significant positive skewness in it's return distribution. This indicates that investors can expect ~LARGEAUTO to recover from drawdowns quickly. Which makes ~LARGEAUTO a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ~LARGEAUTO), DMART has performed really well and deserves to be closely tracked for investment opportunities.

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