Since the start of 2023, the golden period of Indian share market’s outperformance against the global markets seems to be taking a pause.
Benchmark Nifty 50 index has corrected ~4% and the US benchmark Dow Jones is down by 1%.
In European markets, the German index DAX is up by 10%, the French index CAC40 is up by 12% and UK’s FTSE100 is up by 6%.
Is it the right time for bargain buying?
The Indian share markets witnessed selling pressure today and started the week with a negative bias.
As I talk about sentiments, the best way to check the sentiment meter is by Fear and Greed indicator.
The Fear and Greed index is a popular sentiment indicator used by traders to measure the level of fear or greed in the market.
The index ranges from 0 to 100, with values above 50 indicating greed and values below 50 indicating fear.
Extreme greed is a sign of caution when the index goes above 80 while extreme fear is an opportunity to accumulate an oversold stock when the index is below 20.
On the Nifty 50 daily chart, the Fear & Greed index is in an extreme fear zone.
Nifty Daily Chart
Historically, if the Fear & Greed index goes below 20 (orange zone), it is the best buying opportunity, and the Nifty has entered this zone as it broke the budget 2023 lows of 17,343 today.
The reversal in the market can be on cards and I believe traders and investors should add oversold stocks to their watchlist.
Oversold Stocks in India
A technical analyst will use the best strength indicator Relative Strength Index (RSI) to identify the overbought and oversold zone.
The RSI ranges from 0 to 100 and is based on the average gain and loss of an asset over a given period of time.
An RSI value of 30 or below is generally considered oversold, while an RSI value of 70 or above is considered overbought. When the RSI reaches an oversold level, it may suggest that the asset is undervalued and due for a price increase, and traders may look to buy the asset.
The minor trend on D-street is bearish but the primary and secondary trend is still bullish.
In the primary and secondary bullish trend, the buy-on-dips strategy in oversold stocks works great.
We shortlisted the stocks based on a 14-period RSI, weekly and daily.
Here is the list of stocks which are in the oversold zone on daily as well as weekly chart from the Nifty500 index.
Traders and investors should consider the risk if markets continue to trend southwards in sync with the global markets.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com