29 out of Nifty 500 stocks overbought; ABB, Apar Inds signal up to 20% gain

Overbought is a condition in the stock market where market participants prefer to book profits and wait for healthy correction to re-enter. However, there are several stocks that usually get missed due to their robust momentum and reluctance to any sell-off.

Technically, the Relative Strength Index (RSI), most preferred indicator among traders; gauge the overbought and oversold condition by charting the strength on the scale of 0-100 values. 

Herein, value greater than 70 is regarded as overbought and below 30 values as oversold. 

At present, in total 85 stocks in Nifty 500 index are trading in the overbought category. Out of these, close to 25 stocks are signalling further upside outweighing the current selling pressure. 

Such stocks exhibit resilient underneath strength that if continues to see long bias, could witness fierce bullish strength. 

Shares of Anupam Rasayan India, Apar Industries, Bharat Dynamics, Carborundum Universal, Engineers India, Gujarat State Fertilizers & Chemicals, IDFC First Bank and Indian Railway Finance Corp have chart structures that imply gradual upside in the medium-term.

On Thursday, ABB, Apollo Tyres, Cholamandalam Investment and Finance Company, Hindustan Aeronautics, Indian Railway Finance Corp, Mahindra & Mahindra Financial Services, REC, Rail Vikas Nigam and Siemens have reached a new all-time high 

Technically, whenever a stock imposes a robust chart structure in the overbought category, the trend seems to reveal a build of convincing strength for the next breakout level. 

While it is risky to be bullish on the stock trading in the overbought category, the underlying trend must to be followed at all time. 

Thus, selective stocks in Nifty 500 index are poised for up to 20 per cent upside, as per their respective charts patterns:-

Source: spidersoftware

Source: spidersoftware