There are two markets in India – one the larger names which comprise the Nifty 50 Index and the second being the broader 500 names which comprise the Nifty 500. While Nifty 50 sets the overall direction for the market, there are phases when one outperforms the other.
See the chart above. The green arrows show the phases when Nifty 500 outperformed the Nifty 50. 2009 -2011, 2014 to 2016 and now 2020 onwards. What this implies is that on a relative basis we would benefit from owning the broader market as compared to the large cap names that comprise Nifty 50. This is clearly evident as in the last few weeks, individual stocks are zooming, while Nifty is clearly stuck in a range.
The above monthly chart shows the Nifty 500 with the KST. The green arrows show when the CNX500 has been super bullish. Now is one of those phases. The next few months should be very profitable in owning outperforming stocks from the Nifty500 Index.