2364.29 -1.01 (-0.04%) Buy

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STEEL THEME investors update their stop-losses higher

15 min read

Steel managed to outperform the broader market on Friday. It fell by -0.04% to close at 2364.29. On a day when the overall market breadth was 71%, it closed higher than 72% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.13%.

[Theme constituents]

Buy-and-Hold investors in ~STEEL experienced a maximum drawdown of -15.98% over the last three months. It fell by -10.78% during this strong bearish trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.


~STEEL has been underperforming the NIFTY-50 index in recent time. It showed significant outperformance (compared to the NIFTY-50 index) from 15 Jan, 2016 to 10 Sep, 2018. Over the last 2 years 11 months and 13 days, ~STEEL outperformed the NIFTY-50 index on 54% days.

~STEEL returned losses on 54% days in the last three months. During this time, it delivered on average -0.17% per day. It delivered it's worst daily return of -5.14%, during this period, on Friday, 28 Sep, 2018. The longest stort-term trend during this period was 7 profitable days, which started on 26 Oct, 2018 and went on till 5 Nov, 2018. This bullish trend returned +9.55% to investors.

During the last year ~STEEL had 6 profitable months and 6 loss making months. ~STEEL returned profits in more months than NIFTY-50 index. ~STEEL significantly outperformed NIFTY-50 index in Aug 2018, when it returned +16.18% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. ~STEEL had a longer winning streak of profitable months than NIFTY-50 index. It went up in 3 straight months (from Jun 2018 to Aug 2018) during which period it delivered +21.41%. It is interesting to note that both ~STEEL and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.
-- George Soros

~STEEL 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 ~STEEL's volatility from 17 Sep, 2018 to 28 Sep, 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 ~STEEL 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.

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

Based on your interest in ~STEEL you may find it interesting to know that HATSUN and AARTIIND are both mid caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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