Indian Stock Market Analysis by Epic Research
Indian Stock Markets have been witnessing tough times, mainly due to global cues. The local companies have performed well in quarterly results but economic indicators suggest slower growth. Stock Market Analysis by Epic Research follows....
60% of Nifty50 stocks and 70% of Nifty500 stocks have witnessed Death Cross formations on daily charts. This is what we have seen lately as in terms of a measure which checks the breadth structure of Nifty components 50 components and other broader market indices. This largely doesn't mean there is a shorting opportunity in that particular stock as there may be some different play on Weekly or Monthly time frame. But it doesn't indicate cautiousness and overall weakness. But it has, more importantly, to do with overall breadth of the market which is very bearish.
One can apart from Death cross use many other indicators such as Relative Strength Index which shows the strength in prices if they are sustaining above some long term moving average. A reading above 50 shows bullish bias while above 60 shows strong strength in prices. But, Post a death cross signal, this can help identify oversold opportunities. ADX is another indicator that shows the strength in trend. One should also observe that Deathcross may be happening on a daily scale and it has a lot of noise. So one should also look at Weekly or Monthly Scale.
The history suggests there is a lag in this indicator. So probably when it is happening you are already somewhere in the middle of a bearish trend. Since this lag is huge it may be followed by some consolidation but the overall indication is that trend is negative for now. A sustained death cross was seen in 2015 when we corrected it from 9080 - 6900. It was a year of secondary movement. After that, a death cross was seen in 2017 but that was a major bottom. So a lot of sector rotation is seen. Which sector is performing during that period. Is it Value stocks or growth? Midcap or small-cap. Which sector has relatively better strength as compared to Index/benchmark.