Nifty 50 from being oversold has quickly turned into Overbought.
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1) Nifty 50 – RSI back above 70 but with a major momentum shift.
Although i prefer to use RSI more for RSI divergences and catching bottoming out but today we look at the current situation from a momentum perspective.
- Nifty has been in a channel after topping out in end of 2021.
- The last couple of times Nifty topped with RSI 70.
- The current break into overbought looks similar to a momentum shift last seen in August 2021 and November 2020. ( Shown with Green Vertical lines and circle.)
- Such a momentum shift generally indicates a major bottom is done.
- Can this be a start of a bigger trend?
- Even if its not a bigger breakout such a shift is start of a lot of sectoral/stock and thematic trends.
- One may now start focusing lesser on Index but focus on finding new themes/sectors/stocks which may outperform even in an Index correction/consolidation.
We did pick the leading sector correctly right at the bottom – Banking. Check this detailed presentation done on 24th June 2020 -
The sector continues to look a leader alongwith Autos ( Older post on Autos in May )
Nifty50 Equal Weight – New Leadership needed for Breakout.
- A clean channel breakout on the Nifty50 Equalweight.
- The chart below in red is the RS with the Nifty50.
- The last time it gave a breakout was when Reliance Topped and rest of the names in Nifty50 did well.
- The last two tops coincided with a top in IT.
- If this breakout has to continue who takes leadershio – Banks and Financials/Auto/Cap Goods or happens alongwith some recovery in IT and Reliance ?
- Will get answers when BankNifty can also take out major highs. Autos/FMCG have already done so. Cap Goods coming close.
3) Nifty Mid100 – Nearing the channel resistance. A dip before it breaks out or right away ?
4) Brent Crude – Almost back to Russia invasion of Ukraine price. About to break the 94-97 supports.
Now some interesting charts from the Nifty50 which are poised to show fresh leadership. So not posting any Auto names ( clear ATHs & 52 week highs in M&M and some others. )
5) ICICI Bank – Back near to all time highs.
6) SBI – Back near to all time highs.
7) Sun Pharma – Sade Sati to get over ?
8) Reliance Inds – Some more time sideways before it breaks out on one of the sides ?
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