August 11, 2013

Effect of heavy weight stocks on nifty

We know that a stock having a higher weight in the index can cause a bigger move in nifty as compared to a stock having low weight.

Now some interesting observations... the top 7 stocks have approx. 50% weightage. This means a 2% rally in these stocks followed by a 1% decline in remaining 43 stocks will still lead to a 1% gain in nifty.

Or if ITC rallies 10% in a single day and ALL the other stocks close 1% in the negative, the nifty will still close marginally in the positive!

Lastly, yesterday RANBAXY was up 28% but the weight of this is 0.24% - this means the 28% gain would have barely contributed 4 point to nifty. In contrast, a 1% move in ITC leads to a 6 point move in nifty (assuming level of 5600).

4 comments:

  1. Kapil ji, you are doing very appreciable work in the field... thanks.

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  2. kapil sir i want real time data sarvice for amibroker tell me plz how to cont with u ?

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