Telecom THEME

521.689 +8.68 (+1.66%) Sell

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TELECOM THEME investors hold onto their investments as it marginally outperforms

15 min read

Telecom managed to outperform the broader market on Friday. It surged by +1.66% to close at 521.689. On a day when the overall market breadth was 71%, it closed higher than 16% of the market. In comparison, the benchmark NIFTY-50 index closed today at +0.13%.

[Theme constituents]

Buy-and-Hold investors in ~TELECOM experienced a maximum drawdown of -24.02% over the last three months. It fell by -17.38% 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. The net profit from Short signals was +15.18%.

Trend

~TELECOM has been underperforming the NIFTY-50 index in recent time. It showed significant underperformance (compared to the NIFTY-50 index) from 1 Jan, 2016 to 1 Oct, 2018. Over the last 2 years 11 months and 13 days, ~TELECOM underperformed the NIFTY-50 index on 55% days.

~TELECOM returned losses on 59% days in the last three months. During this time, it delivered on average -0.3% per day. It delivered it's worst daily return of -4.94%, during this period, on Monday, 24 Sep, 2018. The longest stort-term trend during this period was 8 losing days, which started on 27 Sep, 2018 and ended on 9 Oct, 2018. This bearish trend lost -12.24% of investor capital.

During the last year ~TELECOM had 5 profitable months and 7 loss making months. Profitable number of months of ~TELECOM and NIFTY-50 index were the same. ~TELECOM was also a more risky investment than NIFTY-50 index as it's worst month in the last year, Sep 2018, returned -18.56% compared to -6.42% returned by NIFTY-50 index in Sep 2018. ~TELECOM and NIFTY-50 index, both had periods of 2 consecutive profitable months.

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.
-- Charles Dickens

~TELECOM 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 fall in ~TELECOM's volatility from 24 Sep, 2018 to 27 Nov, 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 ~TELECOM has significant negative skewness in it's return distribution. This indicates that ~TELECOM is very risky for short-term investment and can significantly underperform for long durations.

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

Based on your interest in ~TELECOM you may find it interesting to know that MAHABANK and SUNPHARMA have both performed similar to ~TELECOM and can be considered by investors as alternative investment options.

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