Why Nifty50 follows Technical analysis, even though it is group movement of 50 individual stocks
Legend says, anything that trades will follow technical analysis as end of the day technical analysis is all about price movement based on demand and supply and believe it follows patterns and trends. Each one will have their own perspective so it up to the user to come to any conclusion based on his own experience.
I short hdfcbank , icicibank etc only if I feel there is resistance in banknifty…As a retailer if I see this… institutions too will see it I guess… not sure.
nifty 50 future + index + heavyweight stocks will be mostly in sync .
Most Nifty stocks are traded on algos
Algos are written on some logic, it will not be random
And what will be the logic? It will be technical analysis, levels, support, resistance
When market reaches a resistance for e.g. today 12300. All retail traders get excited and go buy. But still it comes down.
Who creates this pressure? Its the algos who are tuned to sell at 12300.
It will cross resistance when algos are tuned in different manner (OR) bullish algos overcome bearish algos.