In our last article, we discussed the performance of sectoral indices. A look at the thematic and strategy indices on the National Stock Exchange (NSE) would be a logical follow-up to the previous post.
We will be using the same Point & Figure charting based methodology, that was used earlier, to identify the outperformers in relation to the Nifty 50 index.
The objective of this article is to address:
- Which are the indices that are outperforming the Nifty 50 index?
- What is the technical outlook for these indices?
- What is the upside potential and trend invalidation for these indices?
Let us begin with the Relative Strength Matrix scores which is generated across four different box sizes in the Point & Figure chart. These four box-sizes capture the trend in the ratio chart or the relative strength chart across multiple time frames. The benchmark for this study is the Nifty 50 index.
Here is the Relative Strength ranking table. The sectoral indices are not included, and the focus is on the outperformers from the thematic and strategy indices offered by NSE.
If you notice, the Nifty SMALL CAP 50 index or the Nifty small cap 50 index is at the top, suggesting that this index is the top outperformer in relation to the Nifty 50 index. Here is the ratio chart of Nifty SMALL CAP 50 index versus Nifty 50 in the Point & Figure format.
The Nifty SMALL CAP 50 index has been in an uptrend since May 2020. There was a bit of a ranging price action evident in March – April 2020 suggesting on-par performance. The subsequent uptrend since May suggests that the Nifty SMALL CAP 50 has been outperforming Nifty 50 index.
The ratio chart is at a crucial resistance level and a breakout here would impart momentum to the Nifty SMALL CAP 50 out performance. Let us also take a quick look at the price chart of the Nifty SMALL CAP 50 to understand the technical picture and outlook.
The price is in a strong uptrend and there is an open upside targets of 4,250 & 5,200. The second target of 5,205 is slightly long-term oriented and would take a few months or even years to achieve. These targets would be invalidated if the index falls below 3,300.
Here is the list of index heavyweights from the Nifty SMALL CAP 50 index for a quick reference. (Source www.nseindices.com)
The Nifty Midcap Liquid 15 is another outperformer in relation to the Nifty 50 index. Here is the chart of this index in the Point & Figure format.
The price is at an life-time high and the undertone is bullish. There are open upside targets of 6,480 and 7,280. The second target of 7,280 again is relevant from a medium to long term perspective and it may take several months to years to achieve this target. A fall below 4,850 would invalidate the positive outlook for Nifty Midcap Liquid 15 index.
Here is the table that captures the top 10 heavyweights of Nifty Midcap Liquid 15 index.
The Nifty Mid Cap 50 index is another index which is among the top outperformers versus the Nifty 50. Let us take a quick look at this index too. Here is the Point & Figure chart of the index with relevant targets.
This index too is at life-time highs and the trend is bullish. The short-term targets are 7,340-7,420 while the medium-term targets are 8,200-8,600. The positive outlook for Nifty Mid Cap 50 index would be under threat if the price falls below 5,800.
Here are the top 10 stocks having maximum weightage in the Nifty Mid Cap 50 index.
Also Read : Nifty Analysis on 7th March 2021