Technical Analysis of Indian Equities by Nooresh

2018 till Now – Random Portfolio down 20-40%. Market Returns are not Linear !!

 

Random Portfolio – 2018

 

We have been doing Random Portfolio exercises for the last few years. We started looking at this interesting topic almost 3 years back and could make a template with the help of my friend Prashant Krish and now my team mate Harsh Doshi does the iterations for the last couple of years.

Every time we have a fantastic year we do this exercise to tone down the emotions which come along with a great year. This time after a bad year this exercise is a consolation that the market has been bad for many.

Random Portfolio Selection Filter

•The only filter was stock should be above 10 rs and listed on NSE. ( to remove unusual big movers or duds )

•25 stocks selected randomly ( rand between function) with an equal weightage of 4%.

•Time Period – Last 6 months and Year to Date.

•No shuffling of stocks. Just buy and hold.

•No brokerage applied.

We created 5 random portfolios on the above selection criteria.

 

Recommend reading the Previous posts on this Topic.

1) Best time for Advisors to show Performance Reports/CAGR to sell their services – Part 1.( Oct 2014)

2) Best Time for Advisory Services to show Alpha & sell Services/Equity Related Products ( August 2016 )

3) Now is the Best Time for Successful Investors to give Gyaan on Investing.

4) Doubled your Money in Last 3 Years ? Skill or Luck ?

 

 

Lets look at returns of Random Portfolio for YTD 2018

01-01-2018

28-11-2018

Portfolio

Initial Equity

End Equity

%  Returns

Random Portfolio 1

1000000

648578

-35.14%

Random Portfolio 2

1000000

611148

-38.89%

Random Portfolio 3

1000000

653878

-34.61%

Random Portfolio 4

1000000

688377

-31.16%

Random Portfolio 5

1000000

763675

-23.63%

Average Returns (%)

 

-32.7%

 

www.nooreshtech.co.in

 

 

Lets look at returns of Random Portfolio for FY 2019 (April – Nov 2018)

02-04-2018

28-11-2018

Portfolio

Initial Equity

End Equity

%  Returns

Random Portfolio 1

1000000

835759

-16.42%

Random Portfolio 2

1000000

760781

-23.92%

Random Portfolio 3

1000000

688149

-31.19%

Random Portfolio 4

1000000

777717

-22.23%

Random Portfolio 5

1000000

890999

-10.90%

Average Returns (%)

 

-20.9%

 

www.nooreshtech.co.in

 

 

The things dont look that bad on a 2 year time frame for the Random Portfolio.

  02-01-2017 28-11-2018  
Portfolio Initial Equity End Equity %  Returns
Random Portfolio 1 1000000 1117279 11.73%
Random Portfolio 2 1000000 1068111 6.81%
Random Portfolio 3 1000000 1213430 21.34%
Random Portfolio 4 1000000 996256 -0.37%
Random Portfolio 5 1000000 899453 -10.05%
Average Returns (%)   5.9%  
www.nooreshtech.co.in      

 

Nifty 2018

This calendar year was very volatile. Nifty started at fresh high of 10,500 levels rallying to almost 11,170 levels (up 6%), followed by a swift correction to 9950 levels (down 11%) after which it rallied again and made fresh high at 11,800 levels (up 20%) which again was followed by quick fall to 10,000 levels (down 15%). At present Nifty YTD returns are at ~3%

 

Index Performance 2018

 

Nifty up 3.06%

Sensex up 6.15%

BSE Small-Cap Index down -25.08%

BSE Midcap Index down -15.94%

S&P BSE 500 Index  down -4.03%

S&P BSE 100 Index up 0.6%

Nifty Midcap 100 down -17.46%

Nifty Small 100 down -31.81%

 

Smallcap Indices have had a major drawdown after 5 years of a strong rally and 2017 was a year without a 5% correction in the benchmark. A year like 2018 reminds us that markets are not Linear and the importance of being patient and disciplined.

Do read this article on the Smallcap Index Cycles -

http://www.nooreshtech.co.in/2018/09/smallcap-index-cycles-2005-2018-its-darkest-before-dawn.html

The only other year when Nifty was up and Smallcap and Midcap Indices down was in 2013. In hindsight that turned out to be the best time to invest. The broader market as well as benchmark is not as cheap as 2013 but even if we see a mini 2014 wont mind it.

Index Performance 2013

Nifty up 5.93%
Sensex up 8.12%
BSE Small-Cap Index down -12.10%
BSE Midcap Index down -6.84%
S&P BSE 500 Index  up 2.32%
S&P BSE 100 Index up 4.93%
Nifty Midcap 100 down -6.17%
Nifty Small 100 down -9.75%

We think 2019 should be a much better year and surprise pleasantly.

Article by Nooresh Merani

Nooresh has written 2705 articles.

You can follow Nooresh Tech on Facebook and Twitter here.


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