Consequently, a company’s free-float market cap would be, number of shares available to public * market price of each share. This excludes promoter holding or any holding apart from the public. In 2009, this was changed to the free-float market capitalization method to stay in line with global practices.įree-float means the total number of shares available to the public to trade. The index was earlier calculated according to the market capitalization method. These are further divided into the Nifty auto index, the Nifty bank index, the Nifty IT index, and the Nifty FMCG index, among others, based on the sector the company represents. The constituents of the index include, among others, HDFC, ICICI Bank, Hindustan Unilever, ITC, Larsen and Toubro (L&T), Reliance Industries and State Bank of India (SBI). Incepted in 1995, the base year of the benchmark index is also the same, while its base value is set as 1,000. In other words, the market movement in these 50 companies decides the direction in which the Nifty will move. This is because the index comprises the weighted average of 50 companies, as opposed to the Sensex which comprises the weighted average of 30 stocks, representing the biggest industrial sectors. The term was coined using the words ‘National’ and ‘Fifty’. It is managed by the National Stock Exchange (NSE) through its subsidiary India Index Services and Products (IISL). Like the Bombay Stock Exchange’s benchmark Sensex, which is a constituent of 30 well-performing, heavyweight stocks, the Nifty, or the Nifty50 is another broad-based stock market index in India. Milan Vaishnav, CMT, MSTA, is a Consulting Technical Analyst and founder of EquityResearch.asia and ChartWizard.ae and is based at Vadodara.Introduction to Nifty What is the Nifty 50?
(Nifty 500 Index), which represents over 95% of the free float market cap of all the stocks listed. In the above Chart, they show relative performance against Nifty500 Index (Broader Markets) and should not be used directly as buy or sell signals. Important Note: RRGTM charts show the relative strength and momentum for a group of stocks. While Nifty Financial Services index stays in the improving quadrant, Bank Nifty has rolled inside the leading quadrant. Some isolated stock-specific performance may be seen but overall relative underperformance may continue to persist. Nifty Services sector, Realty and IT indices are also seen languishing inside the lagging quadrant.
They are expected to put up relative outperformance against the broader Nifty500 index. Nifty FMCG, Consumption, Auto, Infrastructure, PSE, and Energy groups are inside the leading quadrant. Nifty Pharma index has also rolled inside the weakening quadrant. These groups are likely to post relative underperformance against the broader markets. Quadrant, while the media index is seen languishing inside the lagging quadrant. While few of the defensive pockets are showing improvement in the relative strength and momentum, a few other high beta groups are also showing possibilities of resilient performance from them. The analysis of Relative Rotation Graphs (RRG) shows some mixed setup. In our look at Relative Rotation Graphs®, we compared various sectors against CNX500 (Nifty 500 Index), which represents over 95% of the free float market cap of all the stocks listed. In the coming week, sectors like FMCG, consumption, and select financials may post good performance.
It would be rewarding to stay exposed to pockets showing strong or improving relative strength. It is strongly recommended to keep leveraged exposures curtailed.
Importantly, this may not lead to any immediate fall in the markets, but there are possibilities that all up moves may get sold into. The decline in OI has come with the decline in Nifty, and this hints at long unwinding at higher levels. Nifty current month futures have shed over 2.59 lakh shares or 2.22% in net Open Interest. The derivatives data shows that long unwinding has happened in the markets. This means that as long as Nifty stays between 15,700-17,000, it will not have any definite directional bias and we will see the markets oscillate back and forth in this wide trading range. Besides this, the most recent move has dragged Nifty back inside the 1,000-point trading range which has 15,700 as its pattern support area.