Where is Bank Nifty headed?

Banking sector shows some positive signs. Policy initiatives of Government are able to revive the sector. From the chart, we can see that a year long resistance has been crossed and now prices are consolidating.
Unlike the last update(Indian Banking Revisited), where 29 components were showing total negative signals or 9 non confirming signals, we can see only 2 total negative signals out of 39 banks. The number of total positive signals has increased from 1 to 16. Now that we are getting some positive price confirmations, we can now invest in some stocks from banking sector.

We have also updated on some of the buys from the banking sector in the report.
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Indexing: The INDIA 30 Orpheus Risk Management Index (ORMI) is based on proprietary algorithm.
The indices values that are disseminated today are broadly based on market capitalization methodology. Market capitalization methodology has been challenged globally for a few broad reasons. 1) As an asset strengthens it is given more weight 2) As an asset weakens it is given lesser weight. This on one side captures momentum but on the other side suggests investors to focus more on growth compared to value. This increases portfolio risk when market growth slows down or reverses, as has been the case since 2007. When markets contract, the erstwhile top performers push into red for extended period of time causing large drawdowns and emotional pain.
The India 30 Index is based on the above extreme reversion idea i.e. outliers tend to reverse, which suggests that investing is about value picking and extremes are prone to reversion. Our Index extends and fine tunes the idea first mooted by De Bondt and Thaler in their 1981 paper suggesting that 3 year worst losers portfolio tends to outperform the 3 year best winners portfolio.
Coverage India: CNX100, BSE500 traded stocks and Indian Indices.

 
Ayushi has done her masters in economics from Delhi School of Economics and then completed her Post-Graduation in Finance from National Institute of Securities Markets. She completed her graduation in Economics from Lady Shri Ram College. A keen econometrician, Ayushi enjoys financial modeling and risk management.