• : January 3, 2021
  • : Prashant Shah

Process of Identifying stocks using Relative Strength Report

In this post, I will try to explain how one can shortlist sectors and stocks that are outperforming or underperforming in a simple manner by using scanners in TradePoint.

In TradePoint there is a feature under
Table --> Relative Strength report.



This table captures sectors that are outperforming or underperforming against Nifty 50 in the Daily time frame. So, I have selected NSE All sectors as the Group and in Scrip 2, I have selected Nifty 50. I have chosen Daily time frame for analysis.


The scanner output indicates that there are three sectors that are outperforming against Nifty 50.


 
I changed the frequency or time frame from Daily to Weekly and found that Nifty IT and Nifty Pharma is outperforming against Nifty 50



Again I have run the same scanner on Monthly time frame and found that Nifty Realty and Nifty IT are outperforming against Nifty 50.



After Monthly have change the frequency to yearly and found that Nifty IT and Nifty Pharma is outperforming against the nifty 50. In every time frame, Nifty IT and Nifty Pharma sectors are outperforming against the Nifty 50.

Now that outperforming sectors across timeframes are identified, I wish to know which stocks to focus from the Nifty IT sector. Again I will run the same scanner and this time in the Group I have selected IT index and in scrip 2 Nifty IT is selected. I start off with the scanner in the Daly timeframe.



So above marked stock is outperforming against Nifty IT in daily time frame


 
On weekly basis I found that MPHASIS and LTI is outperforming against the Nifty IT.



On Monthly basis also MPHASIS and LTI is outperforming.



On yearly basis too, LTI and MINDTREE are outperforming. So I can easily say that LTI and MPHASIS are the outperforming stocks across multiple time frames from the Nifty IT sector.

Now question is how should I identify and initiate trades?

Simple answer is in both the stocks, long positions may be considered on every Pullback or follow through buy signals with stop loss placed at the Double bottom sell level.

Below is chart of LTI and Mphasis and hope it helps in identifying trade entry and exits.