shrewd: What stocks will lead the next bull market? Check technical indicators

New Delhi: Taking Nifty bulls on a roller coaster ride, the stock market which was in a confirmed uptrend a few months ago, shifted into a pressured uptrend mode and then downtrend mode. After hitting a 52-week low at 15,183 last week, Nifty is now back in a rally attempt phase as the bulls bought the dip as if they were genetically pre-programmed to do so.

Technical indicators do not yet suggest that the Nifty has bottomed, however.

“When market direction changes, it’s crucial to keep your watchlist ready and act accordingly. A great way to find worthy watchlist picks is to focus on stocks that are holding up well. during the correction,” financial services firm William O’Neil India said in a note to investors.

He suggests investors find stocks with higher relative strength ratings. “You would also want your stocks to come from leading groups, so insist on a strong group ranking. Fundamental strength should also play a vital role. Remember, you are looking for the best the market has to offer. This means find stocks with good quarterly sales and earnings growth EPS Rank will help you here,” he said.

Their analysis shows that the RS ratings of major bank stocks with a high weighting in Nifty have improved over the past five weeks, which is a positive indication. RS ratings for IT stocks also improved last week.

According to the report, these sectors may be the potential market leaders if Nifty rallies from here.

On the other hand, the RS ratings of metal stocks, which have been under pressure due to falling commodity prices, are very poor and show no signs of improvement.

“RS evaluations of

, , and fell to 15-30, indicating the damage is deep and may take time to repair,” the report said. Similarly, the RS ratings of real estate stocks also deteriorated noticeably, while those of pharmaceutical stocks remained relatively unchanged.

“Without trying to predict and decode stories, we will take what the market gives and continue to monitor unfolding conditions. Stocks that come out of their basics, with higher relative strength and superior fundamentals, can do well,” said William O’Neil India.

Over the past month, Nifty and Nifty IT have fallen 2.64%, while Nifty Bank has fallen 1.93%. Metals stocks were the biggest wealth erodeers, with the metals index down 11.27% in one month. The pharmaceutical index, on the other hand, lost 4% of its value.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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