- : June 6, 2021
- : B. Krishnakumar
Nifty 50 Equal Weight Index: Case Study
Last week we took a closer look at the Nifty MidSmallcap 400 index. Let us take Nifty 50 Equal Weight index for analysis this week. Not too much attention is paid to this index, but I felt it would be interesting to track this index as well, especially for those who regularly invest in index funds.
Here is the Point & Figure chart of the equal weight index with relevant vertical count targets.
The price is in a strong uptrend and there are open upside counts of 18,083 & 20,133. This is a bullish sign and let us also take a look at the relative performance of this index versus the popular Nifty 50 index. Here is the ratio chart in simple line chart format.
It is apparent that the ratio chart is in an uptrend with the 50-day moving average positioned well above the 200-day moving average. The crossover of the 50-day average above 200-day happened on December 18, 2020. Since this crossover, the Nifty 50 index has gained by 13.9% whereas the nifty 50 Equal Weight index has gained 22.2%.
If you are someone who invests fixed portion of your capital in index fund, then you may want to consider this equal weight fund too. There are mutual funds are benchmarked to Nifty 50 equal weight index. Depending on the outcome of your analysis, you can consider switching between Nifty 50 and the equal weight index.