Nifty 50 (NIFTY.NS)

Short term

Nifty 50 has broken the falling trend channel down in the short term. This signals an even stronger falling rate, but the negative development may result in corrections up in the short term. The price has had a strong fall after the negative signal from the head and shoulders formation at the break down through the support at 24768. The objective at 23450 is now met, but the formation signals further development in the same direction. There is no support in the price chart and further decline is indicated. In case of a positive reaction, the index has resistance at 24000 points. The short term momentum of the index is strongly negative, with RSI below 30. This indicates increasing pessimism among investors and further decline for Nifty 50. However, particularly in big stocks, low RSI may be a sign that the stock is oversold and that there is a chance for a reaction upwards. The index is overall assessed as technically negative for the short term.

Recommendation one to six weeks: Negative (Score: -93)

Medium term

Nifty 50 has broken the floor of the rising trend channel in the medium long term, which indicates a weaker initial rising rate. The index has broken a support level and given a negative signal for the long term trading range. The index has support at points 22000 and resistance at points 25000. RSI is below 30 after the falling prices of the past weeks. The index has strong negative momentum and further decline is indicated. However, particularly in big stocks, low RSI may be a sign that the stock is oversold and that there is a chance for a reaction upwards. The RSI curve shows a falling trend, which could be an early signal of the start of a falling trend for the price as well. The index is overall assessed as technically slightly positive for the medium long term.

Recommendation one to six months: Weak Positive (Score: 42)

Long term

Nifty 50 has broken through the floor of a rising trend channel in the long term. This indicates a slower rising rate at first, or the start of a more horizontal development. The index has support at points 18600 and resistance at points 26200. RSI diverges negatively against the price, which indicates danger of a reaction downwards. The RSI curve shows a falling trend, which could be an early signal of the start of a falling trend for the price as well. The index is overall assessed as technically slightly positive for the long term.

Recommendation one to six quarters: Weak Positive (Score: 41)

Investtech’s analyses focus on a stock’s trend status, short term momentum and volume development. These are central topics of technical analysis theory that describe changes in investor optimism or fluctuations in a company’s financial development. However, Investtech’s strong focus on these elements is due to research results that clearly indicate causation between these factors and future return on the stock market.

Trend

Theory: Stocks in rising trends will continue to rise.

Psychology/economy: Rising trends indicate that the company experiences positive development and increasing buy interest among investors. Read more

Research: Stocks in rising trend channels in Investtech’s medium long term charts have been followed by an annualized excess return of 7.8 percentage points compared to average benchmark development. This is shown by Investtech’s research into 34,880 cases of stocks in rising trends on the Nordic Stock Exchanges in the period 1996 to 2015.
Read more about the research results here

 

Momentum

Theory: Stocks with rising short term momentum will continue to rise. Stocks with very strong momentum (overbought) will react backwards.

Psychology/economy: RSI above 70 shows strong positive momentum. The stock has risen in the short term without any significant reactions downwards. Investors have kept paying more to buy stocks. This indicates that more investors want to buy the stock and that the price will continue to rise. Read more

Research: Stocks with strong momentum have on average continued to rise, and more so than the average stock listed on the Exchange. This is shown by Investtech’s research into 24,208 cases of stocks on the Nordic Stock Exchanges in the period 1996 to 2015 where RSI went above 70 points, indicating strong and increasing short term momentum. On average, annualized, the stocks rose the equivalent of 11.4 percentage points more than the average stock.
Read the research report here

 

Volume

Theory: Rising prices on high volume and falling prices on low volume indicate strength in a stock. Volume can confirm a rising trend or signal that a falling trend is ending.

Psychology/economy: When investors very much want to buy a stock, they have to increase the price to find new sellers. Rising price on high volume shows that some investors are so aggressive that they push the price up to be able to buy the stock. Investtech’s Volume Balance tool measures the relation between price rise and volume and measures investor aggression at rising and falling prices. Read more

Research: Stocks with volume balance above 40 have been followed by an average annual return of 4.7 percentage points on the Nordic Stock Exchanges, shown by research conducted by Investtech into 24,580 cases.
Read the research report here

 

Investtech's analyses

Investtech has combined theory, psychology and research into powerful investment tools.

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Investtech are behavioural finance and quantitative stock analysis specialists. The company sells analysis products to private, professional and institutional investors. Investtech manage the AIFM company Investtech Invest, which invests customers’ funds in the stock market.

Investtech’s computers analyze more than 28,000 stocks from 12 different countries every day. The analyses are presented in eight languages and sold to customers worldwide. In addition to the automatic analyses, the company’s analysts present subjective assessments and recommendations for some markets. The analyses are available to customers in the form of daily morning reports and cases, and weekly market updates and model portfolios.

Investtech’s algorithms for analysis, ranking and stock recommendations are based on research dating back to 1993. Part of the research was conducted in cooperation with Oslo University and the Norwegian Research Council. Research still has high priority for Investtech. Many of the company’s research results are available for customers on the company’s web site.

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