30 Low Volatility Stocks from Nifty 100: Aug 2018

Published: August 5, 2018 at 11:09 am

Last Updated on May 7, 2019

Last month I had published a list of stocks with consistently low price volatility from the Nifty 100. Here is the Aug 2018 update. The Nifty 100 is a set of stocks with the highest market capitalization on the NSE.

From 20 such stocks last month, I have now expanded it to 30. The period considered is one year (Aug 3rd 2018 to Aug 3rd 2017). The list also includes the one year return and the fraction of time the stock traded above or at its maximum ( in this period).

This is an ongoing exploration of studying low volatility stocks and lazy investing – See Aug 2018 portfolio updates. Two of the five test stocks portfolios here are based on low volatility. There are two NSE low volatility indices: (1) 50 NSE stocks that have the lowest price volatility form the Nifty Low Volatility 50. (2) 30 stocks that have the lowest price volatility among the Nifty 100* form the Nifty 100 Low Volatility 30.

To calculate volatility, the standard deviation of daily returns is in the above period is calculated. This tells us how much each return varies from the mean. This is a measure of volatility. Higher the standard deviation, the higher the price will move up and down. Our aim is to hunt for stocks with the least volatility. Why? Because it works! That is why. See: Picking Stocks With Low Volatility: A simple, but effective strategy?


List of 30 Low Volatility Stocks from N100 Aug 2018

HDFC Bank Ltd.
Procter & Gamble Hygiene & Health
Power Grid Corporation of India Ltd.
Colgate Palmolive (India) Ltd.
Hindustan Unilever Ltd.
Britannia Industries Ltd.
I T C Ltd.
Housing Development Finance
Maruti Suzuki India Ltd.
NTPC Ltd.
Kotak Mahindra Bank Ltd.
IndusInd Bank Ltd.
Hero MotoCorp Ltd.
Dabur India Ltd.
Mahindra & Mahindra Ltd.
Marico Ltd.
Tata Consultancy Services Ltd.
Pidilite Industries Ltd.
Reliance Industries Ltd.

The above 19 stocks were also present in last months listing (meaning they were among the least volatile stocks
from 2018-2017, 2017-2016 2016-2015 – all months in July). Only ACC limited has is absent this mon. The remaining 11 entries are:

ABB India Ltd.
Asian Paints Ltd.
Bajaj Auto Ltd.
Bosch Ltd.
Eicher Motors Ltd.
Godrej Consumer Products Ltd.
Larsen & Toubro Ltd.
MRF Ltd.
UltraTech Cement Ltd.
Wipro Ltd.
Zee Entertainment Enterprises Ltd.

Even I know that this is a decent shortlist to start digging further. Of course these many are expensive stocks. So what? Good quality comes at a price!

Please note that low volatility does not mean that the price has gone up in the periods considered. The price could not have moved much or gone south too. Low volatility could mean one or more of the following: the trading volumes are steady and do not fluctuate much. There has not been any market-wide dip in the periods calculated. The companies have neither had good news or bad news. Or they have had only good news or only bad news.

My point is, consistently low volatility does not make a stock an automatic “good buy”. It only means it is worth looking further. So please view this list as an information and do your research before committing money.

Price trading close to max vs return

Suppose there are 250 trading days in a year. We find out for how many of these days the price was at or above the price maximum (in this period). So say this is for 20 days.  So for 230 days, the stock traded below its maximum. The fraction of time the price traded at/above max = 20/230 = 8.7%

Notice that even for this short period, there is a clear correlation between returns and this fraction. Perhaps this seems “obvious”, but I am currently digging deeper with the last 18Y data. So let us reserve judgment until then.

 Price trading close to max vs volatility

A stock that trades close to its maximum or often reaches new maximum typically has lower volatility. We need to dig deeper though.

Price Volatility vs Market Cap

Generally, the higher the market cap, lower the volatility.

Note: This is investment research and I am wearing the cap of an analyst and the cap of an investor. So please do your own research before buying any of these stocks. These are not buy recommendations.

Download the 30 Low Volatility Stocks from Nifty 100: Aug 2018

Update: Nifty 100 Momentum, Low Volatility Stock Screener for May 2019

To analyze the stocks further use these sheets:

Automated Earnings Power Stock Analysis With Screener.in data

Automated Stock Analysis with the Earnings Power Box (MorningStar financials)

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