Adani Wilmar, Nykaa, Star Health among stocks in oversold zone

Indian Market
by 5paisa Research Team Last Updated: Dec 11, 2022 - 12:34 pm 22.5k Views

The Indian stock market has been consolidating after a heavy selloff a few weeks ago. But there are many stocks that are potentially in the oversold zone given their positions on the technical charts.

We considered the Money Flow Index (MFI), which is technical oscillator that incorporates both share price and traded volume data for placing companies in the overbought or oversold baskets. The index can also potentially help an investor to identify divergences that could be hinting at a change of trend in the share price.

The index figures vary between 0 and 100. Anything below 20 could be used as a measure to pick bounce-back candidates. Stocks with a value of more than 80 are considered in the overbought space and therefore may see a selloff.

Since the MFI uses both price and traded volume data, it is also called volume-weighted Relative Strength Index (RSI) as against the conventional technical measure that uses only the stock price.

Overall, we get eight stocks in the Nifty 500 that could register an uptick but there are hundreds of smaller stocks.

Large caps in oversold zone

If we look at the large cap space with market valuation of over Rs 20,000 crore, five stocks meet the mark: Adani Wilmar, Nykaa’s parent FSN Ecommerce, SRF, Star Health & Allied Insurance, and GMR Infrastructure.

Mid-caps in oversold zone

In the mid-cap basket, there are just four stocks that pass the filter. These are Indian Energy Exchange, Blue Star, Brightcom Group and Kama Holdings. All these stocks command a market valuation of between Rs 5,000 crore and Rs 20,000 crore.

Small caps in oversold zone

Lower down, there are more than a hundred stocks that are potentially ready for an uptick. Most of these are from the micro-cap space.

But if we look at stocks with market cap in the Rs 500-5,000 crore range, we have names like Jindal Worldwide, Johnson Controls, MTAR Technologies, Jayaswal Neco, PG Electroplast, Indostar Capital, D B Realty, Expleo Solutions, Elpro International, IFGL Refractories, Texmaco Infra, Rajapalayam Mills, South West Pinnacle and Inox Wind Energy.

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