Pharmaceuticals THEME

1004.98 +0.15 (+0.01%) Buy

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PHARMA THEME investors not showing any loss of confidence as it pauses to catch its breath

15 min read

Pharmaceuticals delivered lacklustre performance on Tuesday. It surged by +0.01% to close at 1004.98. It is currently trading -24% below it's 52 week high of 1325.39.

[Theme constituents]

~PHARMA is currently in a bullish trend. Over the last three months 2 bullish signals in ~PHARMA have generated a profit of +4.0% for investors.


~PHARMA has been outperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 30 Oct, 2016 to 7 Dec, 2018. Over the last 2 years 11 months and 13 days, ~PHARMA underperformed the NIFTY-50 index on 49% days. Which indicates that on days ~PHARMA underperforms the NIFTY-50 index, it's performance is marginally worse than on the days it outperforms the NIFTY-50 index.

~PHARMA was profitable on 58% days in the last three months. During this time, it delivered on average +0.17% per day. It delivered it's best daily return of +4.46%, during this period, on Tuesday, 13 Nov, 2018. The longest stort-term trend during this period was 9 profitable days, which started on 29 Oct, 2018 and went on till 9 Nov, 2018. This bullish trend returned +8.85% to investors.

During the last year ~PHARMA had 7 profitable months and 5 loss making months. ~PHARMA returned profits in more months than NIFTY-50 index. ~PHARMA was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Oct 2018, returned -18.63% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~PHARMA had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Nov 2018 to Jan 2019) during which period it delivered +9.75%. It is interesting to note that both ~PHARMA and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

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~PHARMA 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 fall in ~PHARMA's volatility from 23 Oct, 2018 to 17 Jan, 2019. 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 ~PHARMA has significant positive skewness in it's return distribution. This indicates that investors can expect ~PHARMA to recover from drawdowns quickly. Which makes ~PHARMA a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

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

On a general note (since you are interested in ~PHARMA), two instruments that have delivered similar performance as ~PHARMA are M50 and ~MKTCAP301TO350. They are suitable as good alternative investment candidates that can diversify your portfolio.

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