Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Nifty 500 in Emotional Buyers Market

58 sec read

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.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

How to Send Automated Option Orders from Excel Sheet

In this online webinar we will be discussing how to send automated orders using Microsoft Excelsheet and How to Get realtime data into Excel.
Rajandran R
14 sec read

Bearish Option Strategy: Nifty Hedged Puts – Nov 2020…

Structurally Nov 2020 series is closing the long pending island gap reversal which is an investing reference. However, emotions are running high during the...
Rajandran R
42 sec read

What Could Possibly Go wrong with Nifty?

As of last 9th Oct 2020 closing of Nifty (11914), PE ratio stands at 34.71. By any means it indicates euphoric markets. Recently there...
Rajandran R
1 min read

2 Replies to “Nifty 500 in Emotional Buyers Market”

Leave a Reply

Get Notifications, Alerts on Market Updates, Trading Tools, Automation & More