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You are here: Home / Futures and Options / Nifty 500 in Emotional Buyers Market

Nifty 500 in Emotional Buyers Market

April 14, 2017 by Rajandran 2 Comments

Nifty 500 Index EOD chart

refernce lines indicates unfaded gaps since Mar 2016.

Nifty 500 is showing increasing signs of Emotional Buyers market as unfaded gaps gets exponential since the year 2016. Since Mar2016 CNX 500 had seen a total of 41 gap up and out of that 12 remain unfaded which in other words we call it as exponential gaps.

The NIFTY 500 Index represents about 94% of the free float market capitalization of the stocks listed on NSE as on March 31, 2016. The total traded value for the last six months ending March 2016, of all Index constituents is approximately 87% of the traded value of all stocks on NSE.NSE India

Exponential Gaps indicates momentum buyers are piling on to the trade at every gap ups. Animal Spirits lifts the market higher and higher thereby creating a euphoric environment. Too many animal spirits are dangerous for the trend persistence and the reversal odds are high.

CNX 500 Yearly Price Distribution

Year to Date CNX 500 had generated 15.2% returns. Financial Services, Consumer Goods, Energy, IT and Automobile sectors contributes more than 70% of the Nifty 500 free float marketcap. Similar Exponential Gap are visible in Nifty 100 and Nifty 200 as well which makes fresh investments possess increased risk as the risk-reward aint going to favor investors in the medium term.

Why does that Matters?

It matters a lot from a short term or medium investors perspective. An Emotional Buyers market is sort of overbought market where an short term/medium term investor rarely benefit in the given scenario. statistically, the odds of closing the gaps favor a lot. Chasing the trend as current juntion might not be a wise decision though.

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Filed Under: Futures and Options Tagged With: Emotional Buyers Market, Nifty 500

About Rajandran

Rajandran is a Full time trader and founder of Marketcalls & Co-Founder of Traderscafe, trades mostly using discretionary Trading Concepts like Market Profile, Trading sentimental analysis, building timing models, algorithmic trading models. Instructs professional traders, full time traders & aspiring full time traders. Rajandran attended college in the Chennai where he earned a BE in Electronics and Communications. Rajandran has a broad understanding of trading softwares like Amibroker, Ninjatrader, Esignal, Metastock, Motivewave, Market Analyst(Optuma),Metatrader,Tradingivew,Python and understands individual needs of traders and investors utilizing a wide range of methodologies.

Comments

  1. SOLAI ALAGU A says

    November 24, 2017 at 12:49 pm

    what is animal spirits. pls elaborate

    Reply
    • Rajandran says

      November 24, 2017 at 10:11 pm

      Animal Spirits == Aggressive Investors Behavior it is a term often used in financial markets.

      Reply

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