What is the relation between the bank nifty and the nifty charts?
In the stock market, Bank nifty and nifty charts are often viewed jointly to take intraday as well as positional trades.
When technical analysis is involved in share trading market, you need to consider both the charts to be able to spot high prospect trading ideas.
Bank nifty is an index which represents 12 of the large capitalized banking stocks trading on the National Stock Exchange.
Nifty is an index which represents 50 most liquid and large cap stocks from the NSE. On the other hand, bank nifty only has banking stocks listed under it; nifty has stocks from a range of sectors like banks, automobiles, Pharma etc. listed under it.
Relation between bank nifty and nifty
Bank nifty and the nifty charts are connected .The bank nifty has revealed a link of as much as 0.88 with the nifty.
This high level of association reveals that the Niftytrend and the bank nifty will be the same all the time.
Traders use this data to analyze mutually the charts. At the time if one of the charts is not apparent then they can change to the other chart to see the trend and the movement of the index.
The bank nifty has a beta of 1.2. Beta measures the volatility of any stock or index. This value is compared to the nifty.
A beta value of 1.2 shows that the bank nifty will always move ahead of the nifty.
In case you get an apparent signal by subsequentbank nifty index, you can use it to trade nifty.
While the beta of bank nifty is higher than nifty, most traders trade the bank nifty asit gives a much quicker movement than the nifty.
Therefore, you are supposed to always make it a practice to start your trading day by evaluating both the bank nifty and the nifty charts.
It acts as an authentication tool to your trades. Care should be taken since these values of the relationship between bank nifty and nifty are not lasting and they may change any time.
It is significant to keep yourself updated on the correlation as well as the beta values of the bank nifty as compared to that of nifty to be able to take a better trading call.