Only 93 Nifty 500 stocks trade in overbought territory, more upside likely

Market participants closely monitor the RSI to determine the strength based on 70 and 30 values. This assists in identifying instruments that are supposedly experiencing increased buying or selling.

Overbought territory is the position in which stocks or indices seemingly observe selling pressure and are anticipated to either turn downward or delay the space of rising.

At present, merely 93 stocks in Nifty 500 index are trading the overbought category of the Relative Strength Index (RSI). It is a technical indicator that is plotted on the scale of 0-100, with values crossing 70 are termed as overbought, and values falling 30 are denoted as oversold. 

Market participants closely monitor the RSI to determine the strength of stocks based on 70 and 30 values. This assists in identifying instruments that  supposedly experiencing increased buying or selling pressure. 

Market breadth plays a critical role in gauging the real trend that underpins any bias. When small number stocks enter overbought territory, with prevailing sentiment witnessing noteworthy momentum, the trend is projected to become even stronger as more stocks attempt to participate. 

Among Nifty 50, 16 stocks have entered the overbought condition, which makes it to one-third; leaving more room for upside in remaining stocks, as per the technical charts.  Bajaj Finserv, Bajaj Finance, Hero MotoCorp, Larsen & Toubro and ITC are few among the pack trading in the overbought territory.

Among mid-cap stocks, Yes Bank, Union Bank of India, Shriram Finance, Punjab National Bank, Power Finance Corporation and Piramal Enterprises are few stocks trading in the overbought condition.

Suzlon Energy, RBL Bank , Karur Vysya Bank, Jindal Stainless, IDFC, IDBI Bank and Exide Industries are a few stocks in small-cap index trading on higher values of RSI.

While remaining 407 stocks are yet to enter the overbought region, the space for these stocks to grow remains unprecedented. Even stocks in overbought category like Titan, Sundaram Finance, Mahindra & Mahindra, Larsen & Toubro, Jyothy Labs, Jindal Steel & Power, Jbm Auto and JSW Energy are demonstrating robust chart structures.

The previous two sessions have remained sluggish in the benchmark indices, BSE Sensex and Nifty 50, but the underlying trend is yet to capitalize on the resilient bullish sentiment. 

source:spidersoftware

source:spidersoftware

source:spidersoftware