Want to bottom-fish? Here’s a list of stocks in the oversold zone

by 5paisa Research Team Last Updated: Dec 11, 2022 - 05:53 pm 26.5k Views
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The Indian stock market has been consolidating after a heavy selloff followed by a bounce-back last week. But there are many stocks that are potentially still in the oversold zone given their positions on the technical charts.

To find out stocks in the oversold zone, we considered the Money Flow Index (MFI). The MFI is technical oscillator that incorporates both the share price and traded volume data for placing companies in the overbought or oversold baskets.

The index can potentially help an investor to identify divergences that could be hinting at a change of trend in price. The index figures vary between 0 and 100 and anything below 20 could be used as a measure to pick bounce back candidates and stocks with value over 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 price.

Large-caps in oversold zone

If we look at the large-cap space with a market valuation of over Rs 20,000 crore, just two stocks meet the mark: Ipca Labs and Tube Investments of India.

Mid-caps in oversold zone

In the mid-cap basket, comprising stocks with a market valuation of between Rs 5,000 crore and Rs 20,000 crore, just two names pass the filter. These are Alkyl Amines Chemicals and Carborundum Universal.

Small-caps in overbought zone

Lower down still, the small-cap space has hundreds of names in the oversold zone that fit in with the oscillator range for the MFI. A bulk of these are micro-cap and penny stocks.

If we look at names with a market cap of Rs 500 crore and more, we have Thangamayil Jewellery, GMR Power & Urban Infra, Oriental Carbon, Asian Granito, Binny and Vegetable Products.

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