Analyzing India

The Relationship Between Two Most Important Indian Indices Has Changed

Milan Vaishnav

Milan Vaishnav


The front line index NIFTY50 ($NIFTY) and the Nifty Bank Index ($BANKNIFTY) have always shared a steady one-sided relationship since the inception the two indices.

The above chart shows the NIFTY and BankNifty's co-performance since inception. Right from the introduction of these two indices in the year 2000, the BankNifty, represented with the blue line, has thoroughly outperformed the NIFTY. In percentage terms, the BankNifty has returned 1740.08%, while the NIFTY has returned 464.09% since inception. However, this relationship is set to change for the near term.

The Relative Strength Line (RS Line) of NIFTY against BankNifty has stayed in secular decline over the past two decades. However, it now appears to have reversed its multi-year downtrend and is seen sharply inching higher. The penetration by the RS Line of its 50-Week MA can be seen as a confirmation of this technical development.

It will not be a surprise if we now see NIFTY relatively outperforming the BankNifty in the near term.


Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst,

www.EquityResearch.asia


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Milan Vaishnav
About the author: , CMT, MSTA is a capital market professional with experience spanning close to two decades. His area of expertise includes consulting in Portfolio/Funds Management and Advisory Services. Milan is the founder of ChartWizard FZE (UAE) and Gemstone Equity Research & Advisory Services. As a Consulting Technical Research Analyst and with his experience in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily basis to ET Markets and The Economic Times of India. He also authors one of the India's most accurate "Daily / Weekly Market Outlook" -- A Daily / Weekly Newsletter,  currently in its 18th year of publication. Learn More