What is this chart called? How do we read it and understand it? I guess this would help in picking up the sector and with which we can pick stock in that sector.
Its a relative performance of different sectors w.r..t sensex. The idea is which sector is performing well and leading. My calculations are based on 250 trading days basis. One can also build from April to till date or from Jan to dec basis.
It depends on your analysis.
It also reflects relative strength component...Like if sensex making lower bottom and IT index making higher bottoms..its a early sign of relative strength buldup in IT.
Here we see performance of IT wrt sensex, if its started rising and sensex falling, it means IT started building up, or started accumulation.