Does Stocks follow nifty's movement or vice versa?

[buddy200]

I have noticed that a stock near its resistance started moving up just because index(nifty) was also gaining. So, to avoid any confusion in my trading, i want to know upto what extent we can rely on nifty's movement for predicting stock movement.

 

[rkkarnani]

Nifty's moves are totally dependent on the price moves of its constituents!
The system automatically adjusts the Nifty spot value depending on the price fluctuations of the stocks in it!

So Nifty movement is dependent on the price move of its constituents as a whole ! Its possible and happens always that one stock in Nifty moves up and another goes down, the Nifty moves as per the cumulative effect of all 50 stocks movement and also we know that each stock has different weigtage in Nifty and its move will effect the Nifty move accordingly.

The non Nifty stocks can be affected due to moves in Nifty purely based on 'market sentiment' ! If a stock is near its resistance and Nifty moves up also, it may become a bit easier for the stock to breach the resistance .

 

[Vertigo_1985]

I have noticed that a stock near its resistance started moving up just because index(nifty) was also gaining. So, to avoid any confusion in my trading, i want to know upto what extent we can rely on nifty's movement for predicting stock movement.

Stock may move up if nifty moves up, may do nothing if nifty moves up, may go down if nifty moves up.

First check if your stock is giving clear entry signals then as a additional check you can use Nifty analysis but that too after you have checked that over a period it improves your edge.

Btw if your analysis says that Nifty is likely to move up then why not trade Nifty itself ?

 

[buddy200]

I don't want to take so much risk at this stage of my trading career. Still a beginner, observing. So no F&O for now.

 

[jagankris]

I have noticed that a stock near its resistance started moving up just because index(nifty) was also gaining. So, to avoid any confusion in my trading, i want to know upto what extent we can rely on nifty's movement for predicting stock movement.

Nifty - constitutes 50 stock.
And each stock has its own weightage.

http://www.motilaloswal.com/Broking/Markets/Index-Weightage

Just top 11 constitutes 50.28% of index.

A stock on particular day may/may not move in correlation to Nifty.
Or in other words a trader has to keep check if the stock is moving similar to Nifty.

It is better to follow the charts of the particular stock than presuming that Nifty is going up so the stock should go up and vice versa.

If on a particular day if Nifty and Stock has some correlation then Nifty's movement can be used as a additional confirmation for trading but not otherwise.

 

[pkdoo7]

I think if there is positive sign for cash flow and liquidity of banks is proper for buying and selling equities as it's seen in bank nifty then it is possible that buyers and sellers will be more active and advance in purchase, additionally sentimental news or scoop can drive stake holders in specific way but nifty top 50 can not affect overall to any single entity with all factors , in normal sense it is possible that different shares of different companies would show alter move from nifty overall.