InvestIn10 now tracks / analyses about 76 different Industry Indices for Relative Momentum! If there is an Industry which is Out-performing, we will be one of the first to know!
Was always uneasy about tracking Sectoral Indices, as I knew that Sectors consists of multiple Industries, and not all Industries of a Sector exhibit correlation.
InvestIn10 has created these Industry specific Indices by selecting the Top stocks in every important Industry and weighted them in accordance with their Market Cap to combine them to form an Index which starts from 100 (today – 9 July 2023)
This can be best explained by a case study of #NiftyAuto
NiftyAuto consists of the following stocks
The #NiftyAuto Index is a combination of about 6 different Industries:
- 2/3 Wheelers
- Auto Parts & Equipment
- Auto Tyres & Rubber Products
- Cars & Utility vehicles
- Commercial Vehicles
- Other Industrial Products
We can be pretty sure that not all Industries move together.
Now, let’s analyse the #NiftyAuto Index in conjunction with the different Industries which are related to Auto and understand which industry contributed the most to the recent bullishness in #NiftyAuto Index.
Note: Will be using the custom Indicator “Combi RS”, which detects Relative Momentum w.r.t. #Nifty50.
#NiftyAuto -> the index is bullish from May 2022
(Auto Related) Industry Specific Charts
2/3 Wheelers -> has great correlation with #NiftyAuto Index, it has performed exceptionally well from May 2022.
Auto Parts & Equipment -> has an ok correlation with #NiftyAuto index, we can clearly see an Under-performance between Oct 2022 – Feb 2023, but it is exhibiting a good Relative Momentum presently when compared to the actual Index.
Auto Tyres & Rubber Products -> came into Relative Momentum from July 2022, but is sustaining a great trajectory and looking very good for a longer innings.
Cars & Utility vehicles -> Came into Relative Momentum from April 2022, but presently the Relative Momentum is fizzling out.
Commercial Vehicles -> this is totally un-correlated to the #NiftyAuto index. Presently this is one of the strongest Auto related Industry.
Hope the above use case was good enough to appreciate the usefulness in analysing Industry Indices. You can reach me out on Twitter or in comments of this post if you have any queries.
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