Technically, overcoming of key resistances after a brief period of sideway movement points towards a positive trigger. The BSE Sensex and Nifty have thus far climbed 2 per cent in the last two trading sessions on a weekly scale; such move was last seen in August 2022 that further accelerated into an additional 1.7 per cent gain.
Such a similar positive move can emerge this time too, as currenly only 10 stocks in the Nifty 500 index trade in the overbought category. Altogether, 258 stocks are trading over their 200-day moving average (DMA), thus indicating over half of Nifty 500 stocks are on the bull radar.
Whenever, a stock conquers the 200-DMA mark, the sentiment ought to turn bullish as investors see this scenario as a shift in momentum. They prefer to bet on such inclusive stocks as a 200-DMA cushion builts support base in the short-term.
Sun Pharmaceutical Industries is the only stock among the BSE Sensex 30 and the Nifty 50 constituents' that trades in the overbought category of the Relative Strength Index (RSI).
Federal Bank, among Nifty Mid-cap stocks and Deepak Fertilisers & Petrochemicals Corp, IDFC trade in the overbought condition.
Thus, only if 10 stocks in the Nifty 500 index trades in the overbought condition, the remaining 248 stocks holding above the 200-DMA are yet to rise more to hit this overbought mark. When benchmark indices succeed to defend ground over their key hurdles, the trend could bolster stocks to rally with a decisive trend.
An upside moves of 15-20 per cent cannot be ruled out before stocks hit the upper roof of the overhead sentiment.
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