Empirical

Notes

Weekend Rundown: Smallcap Correction | EQ Nifty 50 | Top Sectors


Nifty Smallcap 100 (USD)

It's a logical level for the index to take a pause. No wonder smallcap stocks had a huge correction last week.



Sensex relative to Gold

It's at an important level. Will Sensex continue to outperform, or gold is ready to take the charge?


Weak Pharma

This is the reason I love equally weighted indices. Nifty Pharma index is in consolidation for about six months and multiple times tried to break above the range. The equally weighted pharma index shows the underlying weakening in constituent stocks.


Nifty 50 top 10 / Nifty 50

It has been a corrective week for the broader market, but the Nifty 50 remained stable.

It's evident that top-heavy weighted names are supporting Nifty 50.



Nifty 50 / Equally Weighted Nifty 50

Here rising ratio line means Nifty 50 outperforming and a few heavily weighted stocks are taking the index higher

The falling line means Equally weighted Nifty 50 outperforming. It indicates wider participation.


It's interesting to see how wider and narrow participation trend works on a longer horizon.


The primary trend since covid decline (March 2020) favors EQ Nifty 50. On a short horizon, this ratio topped out in May '21.



DSP Mutual fund recently came up with an equally weighted Nifty 50 index ETF.


"To buy just 1 share of each stock in Nifty 50 (as of Sep 30, 2021), you will need to pay ₹1.55 lakh + brokerage.

But this ETF allows you to buy the same 50 stocks starting as low as ₹5,000."


Like everything, it needs to be strategized if it's a compliment to the good old Nifty 50 index fund.



Which sector look good now?

Industry group stocks are from Nifty 500 + Nifty Microcap 250. So, it includes a total of the top 750 NSE stock.

Looking at major sectors, Power, Construction, Automobile, and Financial standout.



It would be interesting to see how this data looks by the end of this week. Subscribe to get notified.