115 Nifty500 stocks trade in overbought territory; time to book profit?

The domestic markets are trading near their all-time high levels, with robust sentiment anticipating a new historic peak. The trend on the charts remains highly optimistic, with every corrective move witnessing accumulation. The underlying trend continues to bolster the positive bias.

Currently, there are 115 stocks in Nifty 500 index trading in the overbought category of Relative Strength Index (RSI). Technically, whenever a stock enters the overbought category, the outlook is categorized as a situation where profit booking may emerge. But, this is not always the case. 

RSI measure the strength on the scale of 0-100 value. Stocks floating over 70 are considered as overbought, while those falling below 30 as oversold. However, when the larger trend is strong, stocks in overbought territory tend to continue perform and stay buoyant in the face of any setback. 

Most of these overbought shares are trading with chart structures that denote more upside in the coming sessions.  Shares of ABB India, AIA Engineerin, Alkyl Amines Chemicals, Apollo Hospitals Enterprise, Apollo Tyres, Asian Paints, Cummins India, DLF, Graphite India , IDFC First Bank, India Cements, JSW Steel, K.P.R. Mill, L&T Finance Holdings, Power Finance Corporation, Pidilite Industries, Prestige Estates Projects, RBL Ban, Tata Elxsi , Tata Motors, Tata Power Co. , Torrent Power and UltraTech Cement  are displaying resilient move, absorbing all the sell-off emerging at key hurdles.

At the present space where indices are holding the bullish bias sturdy, stocks doing well on technical charts are tend to perform better.  Ambuja Cements, Berger Paints India, Avenue Supermarts, Hindustan Aeronautics, Indian Oil Corporation, J.K. Cement, NTPC, PI Industries, PNB Housing Finance, Suzlon Energy, Trent and Zomato are in process of building formations supported by technical indicators to rally higher. 

These stocks having spirited momentum could easily see another 10 per cent to 15 per cent upside in the overbought territory of RSI.

Moreover, while these stocks are in an alarm stage, their larger time frames, such as weekly and monthly set-ups, continue to stay highly optimistic. Thus, any corrective move should ideally come across accumulation, as bigger outlook holds the key.

source: spidersoftwareindia