Caution advised: ICICI Bank, TCS, L&T among 8 overbought stocks in Nifty 50

As per the current market scenario, on the Nifty 50 index, there are 8 stocks trading in the overbought territory and likely to see volatile sessions ahead. The “overbought condition” highlights a scenario, wherein the traders and investors intend to stay cautious, rather avoid such stocks for short term trading.

The Relative Strength Index (RSI) is the best indicator to determine the overbought and oversold condition. It is the one which “measures the intensity of change in price” to understand the overbought and oversold sentiment. It draws a decisive line that ranges from 0-100, assists in reading the price strength. Anything above 70 is viewed as overbought and below 30 as oversold.

The overbought list includes Eicher Motors Ltd, ICICI Bank Ltd, Larsen & Toubro Ltd, Maruti Suzuki India Ltd, etc. There are other stocks which may show breakout structure, but still possesses the risk of high volatility and momentum, that may shift in any situation.

The idea of indulging in trading or investment is to identify low-risk, high-return stocks. Indeed, finding a trade that could provide maximum outcome with limited risk not only helps to increase the profitability but also build the much needed confidence.

Here is the list of overbought stocks in Nifty 50: -   
          

Source: spidersoftwareindia