However, with Budget's overhang now behind investors, market participants are turning to stock-centric approach to capitlise on maximum gains. To trade this situation, technical indicators like Relative Strength Index, which defines stocks according to their overbought and oversold condition, come handy. Market participants could consider using RSI to identify stocks which are ripe for profit booking and/or stocks that are flashingh attractive entry points.
Moreover, given the strong uptrend in the overall market, the RSI may also be used for picking stocks that have managed to conquer selling pressure even in the overbought condition. Herein, the stock continues to aggressively move forward in the selling territory, so much so that a sharp up move may see a spurt of over 10 per cent in just a few sessions.
Such a scenario not only exhibits an attractive entry point in a new bullish territory which, if sustained successfully, may even build a bullish sentiment from a medium-term persepective and may see an upside of nearly 25 per cent in the near future.
In this backdrop, a higher number of small-cap stocks are likely to enter the aggressive overbought condition, relative to mid-caps, with volumes showing a tremendous momentum. The stock prices are reflecting a firm strength which may swiftly resisit any weakness and may show potential even amid strong selling pressure.
Nearly 20 stocks in Nifty Small-cap 100 are showing strong bullish signals, compared with just 10 stocks of Mid-cap 100. This list includes.