The two indices in the Indian stock market are Bank Nifty and Nifty. If you are investing in index options, then you should know How to Predict Nifty Movement and bank nifty prediction. Before investing in any index, it is important to know how to predict Nifty movement.
To invest in the nifty index is a very risky trade. Investors should be aware of the high volatility of the Nifty’s nature. It is important to predict the nifty movement for profitable trading. Here in this article, we will discuss how to do the prediction of nifty movement.
What is Nifty 50?
Nifty 50 is one of the important stock indices in the Indian stock market under the National Stock Exchange (NSE). It is founded in 1997 under the National Stock Exchange of India. Nifty 50 is the benchmark of the top-weighted company stocks under the National Stock Exchange. It reflects the average performance of the top 50 companies. It represents the highest market capitalized stocks and their market average during a base period.
Usually, foreign investors who want to invest in the Indian stock market refer to the Nifty 50 to track the trend of the stock. As more than 1300 companies’ stocks are registered on the National Stock Exchange, so they follow the Nifty 50 to take an overview of the market situation. For beginners, they may also follow this method. Among this type of traders prefer to invest their first in Nifty 50 stocks.
The companies under nifty 50 divided into many sectors. The top 50 companies in India from different sectors hold the features of Nifty 50. The companies come from Financial Services, Information Technology, Oil, Gas & Consumable Fuels, Fast Moving Consumer Goods, Automobile and Auto Components, Healthcare, Consumer Durables, Construction, Metals & Mining, Telecommunication, Construction Materials, Power, Chemicals, Services. Each sector holds their own weight under Nifty 50. These stocks movement helps to do Nifty prediction for intraday or for long term.
Here we will show a chart of the each sectors weight.
| Sector | Weight(%) |
|---|---|
| Financial Services | 36.55 |
| Information Technology | 15.13 |
| Oil, Gas & Consumable Fuels | 13.21 |
| Fast Moving Consumer Goods | 8.83 |
| Automobile and Auto Components | 5.84 |
| Healthcare | 3.94 |
| Consumer Durables | 3.30 |
| Construction | 2.90 |
| Metals & Mining | 2.77 |
| Telecommunication | 2.18 |
| Construction Materials | 2.15 |
| Power | 1.94 |
| Services | 0.73 |
| Chemicals | 0.53 |
Nifty 50 is a well-diversified stock index, which reflects the whole market condition. NIFTY 50 Index is computed using the free float market capitalization method under the NSE. Nifty 50 can be used for various purposes such as the benchmark of the top 50 stocks’ market capitalization, ETFs, and structured products.
There are a few variants of Nifty 50, which are NIFTY50 USD, NIFTY 50 Total Returns Index, and NIFTY50 Dividend Points Index. It first appeared in 1997. The top Nifty 50 stocks are Reliance Industries Ltd., HDFC Bank Ltd., ICICI Bank Ltd., Infosys Ltd., Housing Development Finance Corporation, Tata Consultancy Services Ltd. etc.
Here we listed the top stocks with their weight in Nifty 50.
| Company’s Name | Weight(%) |
|---|---|
| Reliance Industries Ltd. | 11.51 |
| HDFC Bank Ltd | 8.36 |
| ICICI Bank Ltd. | 7.57 |
| Infosys Ltd. | 7.54 |
| Housing Development Finance Corporation | 5.72 |
| Tata Consultancy Services Ltd. | 4.55 |
| Kotak Mahindra Bank Ltd. | 3.53 |
| ITC Ltd | 3.52 |
| Hindustan Unilever Ltd. | 3.13 |
| Larsen & Toubro Ltd. | 2.90 |
How to Predict Nifty Movement
As Bank Nifty index, Nifty 50 has a volatile nature of its movement. This nature can be helpful for the intraday traders. They can earn a quick return through Nifty 50 index. Earning more than 2% in intraday is considered a solid profit. If you can trade with the correct strategy it is possible top earn more than 100% of profit, but that is totally depends on the movement of the index. This is the pros of intraday trading on Nifty 50. But there is some drawbacks in it.
If you take any position in Nifty 50 at a certain level, but couldn’t exit from that position at the right time that will cost a huge loss. Mostly who can’t exit, are trapped in this hype. Due to the high volatility, investors can’t make sense of the right strike point for entry and exit levels. The Nifty 50 stocks are the top-weighted stocks and their stock price is much higher. So their prices move quickly. That makes the nifty 50 movement so volatile.
Indicators Nifty 50 Movement
Indicators are a type of tools that are used to make a clear view of the market to the investors. It provides the market trend, whether it is going up or down. Indicators can give a specific information, such as if any asset is overbought or over sold in any range. Using indicators traders can take any position and exit from it in Nifty 50 stocks or in index.
Some Nifty 50 indicators are
- MACD
- MFI
- ATR
- RSI
- Stochastic Oscillator
- ADX
- Camarilla Levels
- Graham Intrinsic Value
- Trendlyne Momentum Score
Nifty Movement Prediction
The easiest way to predict the nifty 50 movement is to analyze the chartings. The moving average can decide the direction of Nifty. As nifty 50 stocks come from different sectors, the direction of nifty 50 depends on their performances. Put Call Ratio and Open interest trend, indicates the Bullish market . Also applies on Bearish market. This is a technical analysis that you can use.
Final Words
Though all trading options are risky, but if you are aiming to earn more profit on intraday then Nifty 50 is the great option. You can easily earn more than 2% per day. But there is high possibility of risk. If there is a chance to get a huge profit, also there is a possibility to lose the money.
Using the charts and other analyses you can earn profit. The indicators can be helpful for trading. It implies nifty moving directions. Hope this will help you to understand how to predict Nifty movement.
If you have any query and doubts you can reach out us through mail : [email protected]
Thank You and wish you safe trading.
To trade in the stock market open a Demat account. Open your account on India’s no 1 stock broker Zerodha.