The market resumed its upward momentum this week, with gains seen across all major indices. The Nifty50 and Sensex advanced 0.89% and 0.86% respectively, while the broader market also participated, with the Nifty500 rising 0.81%. Although the Midcap150 posted a relatively modest gain of 0.59%, strength returned to the small-cap segment, where the Nifty MidSmallcap400 and Nifty Smallcap250 climbed 0.95% and an impressive 1.65% respectively. The broad-based participation, led by renewed buying in small-cap stocks, suggests that investor sentiment remains constructive and risk appetite continues to improve.

Market sentiment remained constructive through the week, supported by continued domestic buying and improving risk appetite across the broader market. The strong participation from small-cap stocks reflects growing investor confidence, although selective profit booking after the recent rally cannot be ruled out. Going into next week, traders should closely watch the progress of the upcoming earnings season, FII/DII flow trends as these are likely to influence near-term market direction.

Technical Perspective

Nifty500 chart

• Daily Chart: The Nifty500 extended its sequence of higher highs and higher lows, closing near the week’s high and just below an important resistance zone. Price continues to trade comfortably above the rising 50-day EMA, confirming that the short-term trend remains firmly bullish.

• The recent breakout has been accompanied by healthy price structure rather than an overstretched move. As long as the index holds above the recent higher low and the 50-day EMA, the path of least resistance remains to the upside, with a decisive breakout above the overhead resistance likely to trigger the next leg of the rally.

• Weekly Chart: On the higher timeframe, the index has reclaimed its long-term moving average and continues to build a pattern of higher lows, indicating that the medium-term trend is gradually strengthening. However, the index is now approaching a key supply zone where sellers have previously emerged.

• Outlook: The overall structure remains constructive across both timeframes. Traders should watch for a convincing breakout above the current resistance zone, as that would significantly improve the probability of a sustained continuation of the uptrend, while any pullback toward support is likely to be viewed as a buying opportunity unless the recent swing low is violated.

Market Breadth chart

• By the end of the week, 58% of stocks were trading above their 10-day EMA, while 65% and 68% were above their 30-day and 50-day EMAs respectively, indicating that the participation remained healthy across all timeframes. The gradual improvement in the 30 and 50 EMAs indicates that the rally continues to broaden, with a growing number of stocks participating in the intermediate-term uptrend.

• The Nifty500 continues to maintain a bullish 10-EMA above 20-EMA, with the crossover that happened on 16th June, retaining the “Stay” signal. This indicates that the broader market remains in a positive trend, favouring existing long positions until a bearish crossover signals a change in market character.

Market Breadth on Pro-Setups Dashboard

Sectoral Performance

Sector rotation continues to provide valuable clues about where institutional money is flowing. Financial Services, Pharma and Packaging remain the strongest leadership groups, while Automobiles, Consumer Durables, Defence and Housing Finance are showing improving momentum and are worth keeping on your watchlist for fresh opportunities. On the other hand, sectors such as Cement, IT, Oil & Gas, Power and PSU Banks continue to weaken, suggesting that capital is rotating away from these areas. Traders and investors should focus their search for high-probability setups within the leading and improving sectors, as stocks from these groups tend to outperform when the broader market remains in an uptrend.

Did you know you can click on the “AI” button on the Sectoral Performance on Pro-Setups page to generate a daily summary report?

Trading & Investment Strategy

• Trend remains bullish – Stay with the trend until price action suggests otherwise.

• Buy strength, don’t chase it – Prefer breakouts from sound bases or pullbacks to support.

• Follow sector leadership – Focus only on leading and improving sectors and avoid stocks from sectors showing persistent relative weakness unless they show clear signs of trend reversal.

• Respect resistance – With the market approaching a key supply zone, expect stock-specific opportunities to outperform broad market exposure.

• Manage risk – Let winners run, trail stop-losses higher, and keep fresh positions appropriately sized ahead of earnings-driven volatility.

Summary

The market continues to strengthen beneath the surface. Price action remains constructive, market breadth is supportive, and sector rotation suggests institutional money is still finding opportunities in select pockets of the market. While the Nifty500 is now approaching an important resistance zone that could lead to short-term consolidation, the overall evidence continues to favour staying with the trend. For traders and investors alike, the coming weeks are likely to reward disciplined stock selection over broad market bets - focus on leaders, respect risk, and let the trend do the heavy lifting.

The market paused its recent broad-based rally this week, with returns turning mixed across segments. While the Nifty50 and Sensex managed to close marginally higher, gaining 0.18% and 0.39% respectively, the broader market witnessed profit booking. The Nifty500 slipped 0.13%, while Midcap 150 and Smallcap 400 declined 0.97% and 0.66%, indicating relatively sharper weakness in the broader market. Despite the pullback, the correction remained orderly, suggesting a phase of consolidation rather than a broad deterioration in market sentiment.

From both the price action and the macro backdrop, last week appears to have been a healthy pause rather than a change in trend. Midcap and small-cap stocks had significantly outperformed over the previous few weeks. The sharper declines in Midcap 150 (-0.97%) and Smallcap 400 (-0.66%) compared with the relatively flat Nifty50 (+0.18%) indicate investors locking in gains. The minutes of the RBI’s latest policy meeting reinforced that the central bank remains comfortable keeping rates unchanged. The absence of policy surprises helped prevent any major downside in domestic equities.

Looking ahead, investors will closely track global developments, particularly crude oil prices, geopolitical news, and foreign institutional flows, all of which continue to influence market sentiment. Domestically, the progress of the monsoon and the recovery in market breadth after this week's profit booking will be key indicators of whether the broader market resumes its leadership or enters a phase of consolidation.

Technical Perspective

• The Nifty500 continues to maintain a sequence of higher highs and higher lows, keeping the short-term uptrend intact. Despite this week’s mild decline, there has been no structural breakdown in price.

• The index is consolidating just below a well-defined resistance zone. Multiple attempts to clear this area indicate persistent buying interest, but a decisive breakout is still awaited.

• The 50EMA continues to slope upward and is providing dynamic support. As long as price remains above this average and recent swing lows, the bulls retain the technical advantage.

• The weekly structure remains constructive, with the index continuing to form higher lows after the April recovery. The intermediate-term trend is clearly improving.

• Price is now testing an important resistance zone created by the previous swing high. A weekly close above this level would strengthen the case for the next leg of the uptrend.

• The inability to decisively break above resistance over the last few weeks suggests consolidation rather than distribution. This is a normal pause after a strong advance and does not yet indicate trend reversal.

Market Breadth chart

Market breadth remained constructive despite some short-term cooling toward the end of the week. Participation across the broader market continues to support the prevailing uptrend, although momentum has moderated from the very strong readings seen earlier in the week.

• Strong participation remains intact: Around 70% of stocks are trading above their 10, 30 and 50EMAs, indicating that a large majority of stocks continue to remain in established uptrends. This is comfortably above the 50% mark.

• Minor short-term deterioration: The percentage of stocks above their short-term moving averages eased from the very high levels (>80%) seen earlier, suggesting profit booking in pockets rather than a broad market breakdown. Importantly, breadth remains firmly positive.

• Nifty500 Trend signal stays bullish: The 10MA remains above the 20EMA, with a “Stay” signal, implying that the intermediate trend remains positive and existing long positions can be maintained.

  Market Breadth on Pro-Setups Dashboard

Sectoral Performance

Sectoral Performance page on the Pro-Setups dashboard provides traders with an early clue about where institutional money is flowing. Sector rotation remained the defining theme last week, with leadership becoming more selective rather than broad-based. While the market’s primary uptrend remains intact, money is rotating into sectors with improving momentum and away from those that have begun to lose leadership.

• Industrials and Pharma continue to lead the market, displaying strong momentum across multiple timeframes along with healthy market breadth. These remain the preferred sectors for identifying high-probability long opportunities.

• Healthcare Delivery, Hotels and Housing Finance are emerging as the next set of leaders. Improving relative strength and accelerating momentum suggest that institutional buying is gradually expanding into these groups, making them sectors to monitor for fresh breakout candidates.

• Several previous leaders are beginning to lose momentum. Cement, Consumer Goods, Fertilizers & Agro Chemicals, Railways and Realty continue to hold up, but their relative strength is fading, warranting tighter stop-losses and greater selectivity rather than aggressive fresh buying.

• Sugar, Metals & Mining, Insurance and Paper remain the weakest pockets of the market. Persistent underperformance across multiple timeframes indicates that capital continues to flow away from these sectors, making them relatively unattractive for new swing positions.

• The remaining sectors remain largely neutral, lacking a decisive momentum edge. These groups require confirmation through improving relative strength before they become attractive trading candidates.

Trading & Investment Strategy

Swing Traders

• Stay selectively bullish. Buy only high-quality breakouts or pullbacks from strong sectors. Avoid chasing extended stocks and wait for low-risk entries near support or after brief consolidations. Keep stop losses disciplined as momentum has cooled.

Positional Traders

• Continue holding winning positions while rotating into emerging leadership. The broader trend remains positive, with nearly 70% of stocks above key moving averages and the 10EMA above the 20EMA. Gradually reduce exposure to sectors showing fading relative strength and redeploy capital into sectors demonstrating improving momentum.

Summary

The market leaves footprints before it makes big moves. Stay patient, follow the evidence - not emotions - and focus on sectors and stocks where institutional money is building momentum. Keep your watchlist updated through the Pro-Setups Dashboard, because consistent success comes from consistently following a repeatable edge.

The broader market extended its strength this week, with participation widening beyond the large-cap space. While the Nifty 50 and Sensex gained a healthy 1.65% and 1.69% respectively, the real leadership came from the broader market, with the Nifty 500 advancing 2.41%, Midcap 150 rising 3.21%, and Smallcap 250 outperforming at 3.72%. This clear outperformance of mid and small caps reflects improving risk appetite and strong stock-specific momentum beneath the index surface.

The market’s strong advance was supported by easing crude oil concerns, a firmer rupee, and steady foreign flows, which helped improve overall sentiment. The rally was notable for its broad participation, with mid-cap and small-cap stocks outperforming, reflecting healthy risk appetite and expanding market breadth.

Looking ahead, traders should monitor crude oil prices, FII activity, and global market sentiment for directional cues. Equally important will be whether market breadth remains strong and leadership continues to come from the broader market. Sustained participation and fresh sector leadership would support the bullish undertone, while narrowing breadth could be an early sign of caution.

Technical Perspective

Nifty500 chart

• The Nifty500 opened the week strong to trade above both its 50EMA and 200EMA, confirming that the intermediate-term trend remains constructive despite recent volatility.

• On the daily chart, the structure continues to oscillate within a broad trading range. The index printed a fresh Higher High on the right side of the chart, but a simultaneous Lower Low formation in the same segment flags that the recovery remains uneven and indecisive.

• The weekly chart paints a clearer picture: the corrective phase that began after the last significant peak remains intact. The market is carving out Higher Lows - a constructive sign - but the critical piece, a confirmed new Higher High on the weekly timeframe, is still missing. Until price decisively establishes a fresh weekly Higher High, the intermediate structure cannot be called a resumption of the prior uptrend.

Market Breadth

Market Breadth Comparative Analysis

Despite the weakness in the benchmark indices this week, market breadth remains healthy. Nearly 70% of Nifty 500 stocks continue to trade above their 50EMA, indicating that the broader market structure remains constructive and well above levels typically associated with a weakening trend. Participation across shorter-term moving averages also remains comfortably below overbought territory, suggesting that the market is consolidating rather than showing signs of exhaustion.

The broader market continues to display underlying resilience despite the pullback in large-cap indices. With participation remaining strong and trend signals intact, the current phase appears more consistent with consolidation within an ongoing uptrend than a meaningful deterioration in market health.

Market Breadth on Pro-Setups Dashboard

Sectoral Performance

Sectoral Performance page on the Pro-Setups dashboard provides traders with an early clue about where institutional money is flowing. This week, Defence and Industrials continue to stand out as the strongest areas of the market, while sectors such as Investment Services, Insurance and Consumer Durables are showing improving momentum and deserve close monitoring for fresh opportunities. Conversely, traders should exercise caution in sectors where relative strength is fading or persistently weak, as capital tends to move away from these groups until leadership improves. Focusing on stocks within leading and improving sectors can significantly increase the odds of finding trades that move in harmony with the broader market trend.

Trading & Investment Strategy

Trading Strategy (Swing Traders)

• Continue to deploy capital selectively into stocks showing fresh breakouts, pullbacks to support, or relative strength within leading sectors. Avoid forcing trades in weak sectors.

• Until Nifty500 breaks 23,300 resistance zone, maintain a stock-first approach rather than an index view. Keep position sizes normal only in stocks displaying strong price-volume confirmation and be quick to exit positions that fail to follow through.

Investment Strategy (Positional Traders)

• Maintain existing winning positions as the broader market structure remains bullish, with nearly 70% of stocks trading above their 50EMA and no evidence of broad-based trend deterioration.

• Use market pullbacks and consolidations to gradually accumulate fundamentally strong stocks from sectors exhibiting improving momentum. Until the Nifty500 decisively breaks above 23,300, focus on staggered accumulation rather than aggressive deployment of cash.

One-Line Takeaway

Stay invested, stay selective, and follow sector leadership - this remains a market that rewards disciplined stock selection rather than broad market bets.

Summary

In summary, the bias has shifted from bearish back toward neutral-to-cautiously-constructive on the shorter-term daily frame, supported by the defended support zone and the held 50EMA. But the weekly trend remains corrective. Traders may find selective opportunities on the long side within the range, while a confirmed weekly Higher High would be the structural trigger to watch for a more meaningful re-rating of the broader market.

The market witnessed a volatile but ultimately resilient week, with large-cap indices regaining leadership and posting healthy gains, led by the Sensex and Nifty50. In contrast, Midcaps and Smallcaps lagged, reflecting a selective risk appetite and a preference for select leadership stocks. While the broader market remains mixed, the strength in benchmark indices suggests institutional buying continues to support the market, even as participation beneath the surface remains relatively narrow.

Markets rebounded strongly during the week as concerns around domestic liquidity eased following the RBI's recent accommodative policy actions and hopes of de-escalation in the Middle East fueled a sharp recovery on Friday. Institutional participation appeared concentrated in benchmark names, helping the Nifty50 and Sensex outperform even as Midcap and Smallcap indices remain subdued.

Looking ahead, traders will closely track the developments in global markets, crude oil prices, and FII Inflow headlines. From a technical perspective, the key trigger will be on whether market breadth continues to improve, as broader participation across sectors and stocks could signal an expansion in risk appetite beyond the current large-cap leadership.

Technical Perspective

• Nifty500 staged a sharp rebound towards the end of the week, reclaiming its 50EMA. However, the EMA continues to trend lower, indicating that short-term sellers still have control of the broader trend.

• This week’s strong bullish candle successfully defended the recent support zone near 22,000, preventing a breakdown and keeping the ongoing trading range intact.

• The weekly chart remains in a corrective phase. The inability to print a new higher high suggest that the market has not yet transitioned back into a confirmed intermediate uptrend.

Market Breadth

From a structural perspective, the Nifty500 has managed to reclaim its foundation. Last week, the index showed resilience with 54% of stocks above the 50-day EMA. After a sharp mid-week deterioration that saw this metric slip to a low of 41%, the recovery to 53% clocked by the end of the week is vital. As more than half of the constituent stocks are now trading above their 50EMA, the market currently possesses the necessary structural strength to support a move higher.

With the short-term participation at 58% and medium-term participation at 52%, the market is neither in a potential overbought nor an oversold zone. This lack of exhaustion suggests that the current move has room to breathe, provided the broad-based participation continues.

While the Nifty 500 closed the week at 22,600 and the improving breadth is undeniable, the technical picture remains nuanced. The “Curtail“ signal (10EMA below the 20EMA) persists, suggesting that the index itself is still working through a period of consolidation. A strong follow-through in the coming days is required to officially flip the trend signal and confirm that this recovery has longevity.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Sectoral Outlook

• Industrials, Telecom, and Pharma continue to be the market’s leadership pockets, maintaining strong relative strength across multiple timeframes with healthy participation. Within Industrials, Rubber and Cables remain the standout segments, while in Telecom, Equipment stocks continue to outperform the Services segment. One useful feature in the Pro-Setups Dashboard is the ability to drill down from Sectoral Heatmaps into individual industries, helping you identify where the real strength lies within a sector rather than viewing it as a single broad group.

  

  As long as these sectors remain above rising intermediate-term moving averages, they are likely to remain the primary hunting ground for positional and swing traders.

• Autos, PSU Banks, Basic Materials, Consumer Goods, and Online businesses are showing improving momentum, with relative strength rankings steadily advancing from longer-term to shorter-term timeframes. These sectors appear well-positioned to provide the next wave of leadership if the broader market expands participation.

• Defence, Power, Metals, Chemicals, and Healthcare Delivery are losing momentum after a period of leadership. While not outright weak, relative strength is deteriorating across successive timeframes, suggesting traders may need to become more selective and avoid chasing extended names within these groups.

• Insurance, Railways, Realty, Sugar, Media, and Consumer Durables remain among the weakest pockets of the market, exhibiting persistent underperformance across both intermediate and short-term timeframes. Until relative strength improves meaningfully, capital preservation and selective exposure remain the preferred approach in these sectors.

The above infographic is part of our Sectoral Performance page and is updated daily after market hours.

Trading & Investment Strategy

• Swing Traders: The sharp rebound from support has improved the short-term backdrop, but with market breadth still lagging, focus on leading sectors such as Industrials, Telecom, Pharma, Autos, and PSU Banks, prioritizing stocks breaking out of well-defined bases. Stay selective and avoid chasing names from sectors showing deteriorating relative strength.

• Positional Traders: The weekly structure continues to reflect consolidation rather than a broad-based uptrend, so maintain a measured long bias and gradually increase exposure only if leadership expands beyond large caps and the Nifty500 reclaims recent swing highs. Continue to favor sectors with sustained relative strength while avoiding persistent laggards where capital rotation remains absent.

Summary

The market enters the new week on a firmer footing after a strong rebound in benchmark indices, but participation remains concentrated in select pockets rather than broad-based. The key question now is whether market breadth can expand and validate the recent strength in large caps. Until then, traders are likely to be rewarded more for stock selection than for taking aggressive index-level directional bets.

Benchmark indices spent another week in consolidation mode, with the Nifty50, Sensex, and Nifty500 posting marginal declines as traders digested recent gains. The broader market remained mixed, with Midcap indices witnessing relatively sharper profit booking, while Smallcaps displayed resilience and managed to close marginally positive for the week. Overall, market breadth continues to favor selective stock-specific opportunities despite the absence of meaningful progress at the index level.

Geopolitical developments, mixed global cues along with RBI’s stance to keep repo rate unchanged while simultaneously lowering India’s FY27 GDP growth forecast and raising the headline inflation projection, kept market sentiment cautious through the week, resulting in mild profit booking across benchmark and midcap indices. Despite the lack of strong index-level momentum, broader participation remained healthy, with smallcaps continuing to attract selective buying interest and demonstrating relative strength. In the coming week, traders will closely monitor the Nifty500’s ability to reclaim and sustain above key resistance levels, while keeping an eye on global developments, institutional flows, and sectoral leadership. A decisive move beyond the recent consolidation range could reignite momentum, whereas continued rejection near resistance may prolong the market’s stock-specific and selective nature.

Technical Perspective

• On the daily timeframe, the index is trapped in a narrowing wedge, printing alternating lower highs and higher lows, a classic volatility squeeze scenario. It is currently pinched right between its 20EMA (22,603) and 50-day EMA (22,576), signaling that an explosive breakout or breakdown is building.

• On the weekly timeframe, the long-term multi-year uptrend has flattened out into a broad sideways range. While the index successfully defended a major structural higher low, it is struggling to break past heavy overhead resistance around 22,714.

• The Bottom Line: The market is at a critical tipping point. A decisive daily close above 22,800 may potentially trigger a bullish continuation toward all-time highs, while a drop below the 22,150 support zone may open the door for a deeper market correction.

Market Breadth

• Nifty500’s 10EMA crossed under its 20EMA on 3rd June triggering a ‘Curtailing’ signal that suggests reduction or closure of existing long positions. It is advisable to tighten the risk management and restrain from taking aggressive position for the time being.

• Market breadth remains constructive but not strong, indicating a market that is consolidating rather than trending aggressively.

  • 10-Day EMA: The short-term momentum, captured by the 10EMA, has failed to reclaim the 50% mark all week, confirming a persistent loss of momentum.

  • 30-Day EMA: 50% of stocks are above their 30EMA, compared to 53% last week.

  • 50-Day EMA: The market currently maintains its basic structural integrity, as the percentage of stocks trading above their 50EMA stands at 54%. Since this remains above the 50% threshold, the broader market has not yet entered a phase of structural failure. Nevertheless, the internals are far from robust. The shift from last week is more telling of underlying weakness. Last Friday, 58% of the stocks were maintaining their 50EMA, a figure that has now cooled to 54%. This suggests that while the index price hasn’t collapsed, the thinning participation is evident as mid-to-long-term supports begin to give way for a larger number of stocks.

• While the structural floor at the 50EMA is still holding for the majority of stocks, the consistent deterioration in breadth over the last week suggests that the index is vulnerable. Without a strong follow-through in broader participation, the market likely faces a period of consolidation or further mean reversion until internal strength improves.

Overall, the data continues to support a stock-picker’s market, where selective leadership and individual setups are likely to outperform broad index exposure.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Sectoral Outlook

The structural dominance of Defence, Industrials, and Pharma underscores where conviction capital is rotating. Swing traders should favor pullback entries in market pillars while monitoring improving sectors for breadth confirmation. Maintain discipline avoiding deteriorating cyclicals until relative strength stabilizes.

The above infographic is part of our Sectoral Performance page and is updated daily after market hours.

Sectoral Performance on Pro-Setups

Trading & Investment Strategy

• Swing Traders - The market continues to reward selectivity over aggression. With short-term breadth cooling and the 10EMA/20EMA Crossunder signal a cautious zone (“Curtail”), traders should focus maintaining disciplined risk management and conservative position sizing on stocks showing high relative strength and constructive pullbacks. It is prudent to keep profits tight and avoid chasing extended moves.

• Positional traders - The broader trend remains constructive, although selective, with roughly half of the market still holding above key intermediate-term moving averages and institutional accumulation visible in pockets of leadership. Investors should focus on leaders and gradually add to fundamentally strong stocks showing relative strength, but should remain selective rather than deploying capital indiscriminately.

Summary

The market continues to consolidate beneath key resistance levels, but the underlying structure continues to be constructive. This environment heavily favors selective stock-picking. Both the daily and weekly structures point to a market that is digesting gains. For now, success is likely to come from proactively managing risks and selectively identifying emerging leaders and high-quality setups, as the market continues to favor stock selection.

Benchmark indices remained largely range-bound through the week, with the Nifty and Sensex consolidating near key resistance zones after the sharp rebound on Monday. While Nifty500 held firm, Midcap and Smallcap indices once again clearly outperformed the frontline indices, indicating sustained risk appetite and strong participation in the broader market.

The week’s sentiment was influenced by prolonged geopolitical uncertainty which kept benchmark indices volatile and capped near resistance levels. At the same time, continued interest in mid and smallcaps helped broader markets absorb external shocks. For the coming week, traders and investors will closely watch whether Nifty can sustain above the 24,000 zone decisively. Any breakout above resistance could trigger momentum expansion, while failure to hold key support levels may lead to short-term profit booking.

Overall, the market continued to behave like a stock-picker’s market rather than a broad and secular rally, with alpha opportunities concentrated in individual setups and emerging leaders.

Technical Perspective

• Nifty500 continues to consolidate within the 22,200-22,800 zone, with price currently hovering marginally above the 50EMA (22,598), indicating a neutral-to-positive short-term structure despite recent volatility. The sell off witnessed on 29th May 2026 afternoon can largely be attributed to MSCI rebalancing exercise driven mechanical sell off that should most probably settle down in the coming week.

• The index has managed to defend the higher low formation after the sharp April recovery, suggesting that buyers are still active near support zones, though momentum remains capped below recent swing highs.

• A decisive move above 23,300 (previous sing high) could strengthen bullish momentum, while a breakdown below 22,200 may weaken the current structure and trigger profit booking.

• On the weekly timeframe, Nifty500 hovers closely around the 10EMA (22,727) and 40EMA (22,556), indicating that the broader intermediate-term uptrend remains intact despite the strong resistance near previous highs.

Market Breadth

• While the mid-week session showed a relatively healthy environment with 60% of stocks trading above their 10EMA and 63% above their 30EMA, the week’s closing figures have slumped to 45% and 53% respectively. This sharp breadth contraction suggests that the optimism seen earlier in the week failed to provide a strong follow-through.

• The 10EMA>20EMA crossover signal on Nifty500 continues to remain active, suggesting short-term trend strength is still intact.

• While the structural strength is preserved for now, the rapid cooling of short-term participation is a cautionary signal. The market has returned to its weekly starting point, suggesting a period of consolidation. Without a fresh breadth expansion, the market remains vulnerable to further volatility as the underlying weakness in short-term momentum persists.

Trading & Investment Strategy

• Swing traders can focus on stocks showing relative strength, strong volume expansion and pullbacks toward rising short-term moving averages and avoiding extended breakout entries, particularly after sharp vertical moves.

• Positional traders can continue to stay invested in sector leaders and fundamentally strong names as long as the Nifty500 sustains above its key weekly moving averages, using corrections as opportunities for gradual accumulation.

Summary

Given the mixed participation and selective nature of the current market, disciplined position sizing, tighter risk management and a stock-specific approach remain far more effective strategy. The broader market structure continues to favor a selective approach. While the intermediate structural strength remains intact for now, the rapid cooling of short-term participation serves as a necessary cautionary signal.

It was a tug-of-war week for the broader market as the Nifty500 consolidated near key technical support, managing a late-week defense of its moving averages despite volatile intraday swings. Macro headwinds dominated the narrative, with escalating tensions in West Asia pushing crude oil back above $100 a barrel.

Last week’s market action reflected resilience in benchmark indices despite mixed global cues and signs of fatigue in the broader market after a strong run-up. Going into the coming week, traders should closely watch FII flows, inflation data, bond yields and sector rotation, as the market is increasingly rewarding selective stock picking over broad-based momentum.

Technical Analysis Perspective

• Daily trend structure remains constructive despite the recent pullback. After the sharp recovery from the March-April low, the index transitioned from a bearish LL-LH sequence into a bullish HL-HH structure. The latest decline has so far held near the prior higher-Low zone and around the rising 50EMA, suggesting this is still a corrective retracement within an intermediate uptrend rather than a confirmed trend failure.

• 20EMA vs 50EMA behavior indicates momentum cooling. Price has slipped below the 20EMA, showing short-term momentum loss, but the 50EMA is still rising and acting as support. Unless the recent swing low is violated decisively, the structure still favors consolidation and re-accumulation over renewed broad-based weakness.

• Weekly chart still lacks decisive trend leadership. The weekly structure continues to show a broad range with alternating HH-LH behavior rather than a clean sequence of sustained higher highs and higher lows. The inability to expand into fresh highs indicates the broader market remains selective and rotational underneath the surface.

Market Breadth

• Breadth has clearly improved from the March washout, but momentum is no longer broadening. % of stocks above the 10/30/50 EMA rebounded sharply from the low’s into April-May. However, all three breadth curves have now rolled over from overbought territory, indicating the market is transitioning from expansion to consolidation.

• Intermediate trend participation still remains healthy. Even after the recent pullback, nearly half the universe continues to hold above the 50EMA, while the 10EMA breadth has already started stabilizing. That is typically characteristic of a corrective pause within an improving market regime rather than the start of a broad structural breakdown.

• Leadership is narrowing, but not collapsing. Pocket pivot activity remains elevated and the 10EMA vs 20EMA crossover signal continues on “Stay,” suggesting institutional accumulation has slowed but not reversed. The sharp drop in stocks gaining >3% from May 19 highs reflects reduced upside velocity.

• Key inference: The market is likely entering a more rotational and selective phase after a strong breadth thrust. Index resilience may persist, but sustained upside from here will require breadth re-expansion and fresh leadership participation rather than reliance on a shrinking group of outperformers.

Trading & Investment Strategy

• Swing Traders: The market is entering a phase where stock selection and risk management become more important than aggressively chasing trades. With short-term breadth cooling off, focus on setups that continue to hold above rising 20EMA/50EMA structures with strong relative strength. Avoid extended breakouts and be willing to book partial profits quicker, as follow-through may become less consistent.

• Positional Traders: The broader evidence still supports maintaining a constructive bias. Use pullbacks into support zones and leading sector consolidations to gradually build exposure

Summary

The market continues to show evidence of structural improvement, supported by healthier intermediate-term breadth and improving trend structure. However, as the breadth expansion has slowed, upside participation is narrowing and the market is transitioning into a more selective, rotational environment rather than a broad-based momentum phase. The weight of evidence still favors maintaining a bullish intermediate-term stance, but with tighter execution, selective positioning and greater respect for risk management and situational awareness of the broader market.

How do you feel your portfolio is positioned to handle the current Geopolitical conflict triggered inflation risks?

The week was dominated by volatility rather than trend, as early weakness from higher crude, concerns of fuel-price hikes, and intermittent foreign selling was met by strong domestic buying and selective short covering in IT, pharma, telecom, and financials. The market did recover late in the week, but broader participation remained uneven, showing that mid- and smallcap pressure persisted even as headline indices stabilized, thereby resolving the divergences in the move of these indices against Nifty50. In short, by the end of the week, the market is in a consolidation zone with sellers active near higher resistance areas.

The week that it was…

• Crude and fuel prices stayed in focus, and the fears of domestic fuel-price hike hurt sentiment early in the week by reigniting inflation and margin concerns.

• Institutional flows were mixed: While FII flows swung sharply and only turned positive on May 14 after heavy selling earlier in the week, DII buying remained strong. However, that helped market recover but not fully reclaim the losses of the week.

Potential catalyst for the next week…

• Whether crude sustains at elevated levels or cools off will be the most important factor as that will directly affect inflation concerns, earnings outlooks, and foreign flows into Indian equities.

• FII behavior remains important after the recent whipsaw in daily flows; sustained buying from FIIs would be a strong confirmation that the recovery has more legs.

• Q4 earnings reactions will continue to matter where the market is currently rewarding stock-specific strength more than any broad index.

• Global cues, especially U.S.-China developments and the bond yields movement in the US, can influence the global sentiment.

Technical Perspective

Nifty500 chart

• On the daily chart, Nifty500 has broken below the recent swing low and slipped under the 50EMA, indicating deterioration in short-term trend structure. The rejection after making a recent higher high suggests sellers are becoming active near resistance zones.

• The 20EMA has started turning lower and price continues to trade below key moving averages, reflecting weakening momentum. Unless the index quickly reclaims the EMA zone, near-term rallies are likely to be a “Sell on Rally”.

• The support zone on the daily becomes the key tactical level. Holding this zone can lead to a stabilization attempt, while a decisive breakdown would increase the probability of a deeper corrective move.

• However, the weekly chart reflects repeated hesitation near resistance with lower highs forming after the rebound. This indicates weakening momentum and raises the possibility of a broader consolidation phase unless the resistance zone is convincingly reclaimed.

Market Breadth

• Market breadth has weakened sharply with the percentage of stocks above the 10EMA dropping to 28% from overbought territory recently. This reflects rapid loss of near-term momentum across the broader market.

• The medium-term breadth remains relatively healthier, with 51% of stocks still above the 30EMA and 57% above the 50EMA. This suggests the broader trend damage is not yet severe despite the recent pullback.

• Pocket pivot activity has steadily declined through the week, falling from 132 stocks on May 11 to 70 on May 15. This indicates waning institutional accumulation and reduced buying conviction.

• The number of stocks gaining more than 3% remains muted at just 105 names on May 15, while 180 stocks declined more than 3%. This points to negative participation and weak upside expansion beneath the index level.

• The overall breadth setup suggests the market is transitioning from a broad-based rally phase into a more selective and cautious environment, where stock picking and risk management become increasingly important.

Trading & Investment Strategy

• The short-term setup has weakened with Nifty500 slipping below its key moving averages, deterioration in market breadth, and a sharp drop in the percentage of stocks above the 10EMA. With pocket pivot participation also declining through the week, broad-based momentum appears to be fading.

• Swing traders would be better served by staying selective, reducing aggressive long exposure, and focusing on stocks showing relative strength and strong volume-supported setups.

• For positional traders, the weekly structure still remains constructive with higher lows intact and over 50% of stocks continuing to trade above their 30EMA and 50EMA. This suggests the market is undergoing a corrective or consolidation phase within a broader recovery structure rather than signaling a confirmed long-term trend breakdown.

Summary

The market appears to be transitioning from an easy liquidity-driven rally into a more nuanced phase where participation is narrowing and price action is selective. While the higher timeframe structure continues to hold, the short-term internals are flashing caution through weakening breadth, fading momentum, and reduced institutional accumulation signals.

In such an environment, disciplined execution, tighter risk management, and a strong focus on stock-specific strength become far more important than broad market optimism.

Large-cap stocks reflected narrow leadership, while the real party happened in the mid and small-cap space, which had broader participation and stronger conviction. Investors aggressively bought into the mid-cap and small-cap spaces. The Nifty500 advanced by 1.9% over the week, with small and mid-cap indices rising by over 3.5% each.

Key triggers in the week

• Geopolitical Tensions Kept Markets on Edge: Escalation near the Strait of Hormuz triggered fears of supply disruption, pushing crude oil back above $100/barrel and weakening the Rupee toward ₹95/$.

• Earnings Season Drove Market Leadership: Q4 FY26 results remained the key stock-specific trigger, with strong earnings and guidance sharply outperforming while misses saw aggressive selling pressure.

• Domestic Flows Cushioned FII Selling: Continued DII buying helped absorb persistent FII outflows, supporting broader market resilience.

• Crude and Rupee Remain Key Risks: Elevated oil prices and Rupee weakness continue to be the biggest macro headwinds, influencing inflation expectations, RBI policy outlook, and foreign investor sentiment.

Potential catalyst for the next week…

• Will Crude Sustain Above the Panic Zone? Markets have already reacted to the initial oil spike. The focus now shifts to whether crude stabilizes or continues higher, which could materially alter market sentiment.

• Can Nifty Hold Despite FII Pressure? Market resilience despite weak global cues would be an important sign of underlying strength. Traders should watch whether domestic liquidity continues to absorb foreign selling.

• Broader Market vs Index Divergence: While index heavyweights remain under pressure, participation in midcaps and sector-specific pockets will be closely watched for signs of continued risk appetite.

• Earnings Reactions Matter More Than Earnings: As the season progresses, management commentary, future guidance, and market reaction to results may become more important than the headline numbers themselves. After all, Good results may not be “good enough” if expectations are too high. Read why this matters in the blog below.
  
  

Technical Perspective

• Nifty500 extended its recovery and continued to maintain a Higher High-Higher Low structure, signaling improving short-term trend strength.

• Broad market participation remained healthy, with price sustaining above both the 20EMA and 50EMA after the recent rebound.

• However, price is now approaching an important resistance zone from the previous consolidation area, which may lead to some near-term consolidation or profit booking.

  

• With nearly 75-85% of Nifty500 stocks trading above their 10EMA, 30EMA, and 50EMA, market breadth continues to remain strong.

• The 10EMA staying above the 20EMA favor a ‘buy on dips’ approach.

• Pocket pivot activity remained elevated through the week, suggesting continued institutional accumulation and healthy momentum despite global macro concerns.

• Short-term breadth, however, has cooled slightly from extremely overbought readings seen in late April, indicating the possibility of some consolidation, rotation, or stock-specific action rather than a straight-line rally next week.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Trading & Investment Strategy

The broader market structure remains constructive despite macro headwinds from crude oil, currency weakness, and FII selling. Traders should continue focusing on stock-specific opportunities driven by earnings, relative strength, and improving breadth. With market breadth still looking healthy, a “buy on dips” approach remains favorable, but position sizing and risk management become important as the market approaches key resistance zones and short-term overbought conditions.

Summary

Indian markets displayed notable resilience through the week, without any material damage to the market structure. Strong domestic liquidity, healthy market breadth, and continued momentum in select sectors indicate that risk appetite remains intact, although the next phase of the rally is likely to be more selective and earnings-driven rather than broad-based.

As a trader, we are always on the lookout for effective ways to gain an advantage in the market. These ways are often based on combining different tools or indicators that we use to create a trading strategy.

Of all the indicators, moving averages are the most popular and versatile indicators that are applied to various markets and timeframes. In this article, we will focus on one specific moving average - the 50-day exponential moving average (50EMA) - and explore how using it correctly can amplify your swing and positional trading success. We will not cover any strategy that traders use. However, we will highlight how the rising 50EMA can be added to any such strategy for taking long trades than a simple filter where price is above the 50EMA.

The 50-day exponential moving average (50EMA)

Moving averages help filter out short-term price fluctuations and reveal the underlying trend. By plotting moving averages on your charts, you can easily identify whether the market is in an uptrend, downtrend, or sideways.

The 50EMA is a medium-term moving average that provides a balance between responsiveness and reliability. It is widely followed by traders and investors to gauge the overall trend of an asset.

Compared to shorter-term moving averages, such as the 20EMA, the 50EMA is less sensitive to short-term price fluctuations. This means it provides a more reliable indication of the overall trend. On the other hand, compared to longer-term moving averages, such as the 200EMA, the 50EMA is more responsive to recent price changes.

Renowned traders like Mark Minervini and William O’Neil have incorporated the 50EMA into their trading methodologies. Minervini emphasizes buying stocks that are in sync with the market and have a strong price structure, including the 50EMA. Similarly, O’Neil, famous for the CANSLIM approach, relies on this moving average as a key factor in identifying leading growth stocks during uptrends.

Importance in Positional Trading

Positional traders take a longer-term approach, aiming to capitalize on larger price moves that may last for several weeks to months. The rising 50EMA is valuable in this style of trading for the following reasons:

• Trend Continuation: Positional traders look to ride strong trends, and the rising 50EMA provides a continuous indication of the market’s health. As long as the price remains above the rising moving average line, it confirms the bull market’s momentum, reinforcing the decision to stay invested for an extended period.

• Timing of Exits: As trends are not everlasting, traders need to know when to exit a position and lock in profits. The crossing of the price below the rising 50EMA can serve as an early warning signal, indicating a potential trend reversal. This allows positional traders to take profits or implement protective measures to preserve gains.

Importance in Swing Trading

Swing traders aim to profit from short to medium-term price swings within an established trend. The rising 50EMA plays a vital role in this strategy, primarily in two ways:

• Trend Identification: In an uptrend, the price typically remains above the rising 50EMA. Observing the price staying consistently above this line confirms the bullish trend and provides traders with a reliable signal to enter long positions. Conversely, in a downtrend, the price will often stay below the declining 50EMA, signaling potential short-selling opportunities.

• Pullback Confirmation: As pullbacks are common in trending markets, the rising 50EMA acts as a support level during uptrends. When the price pulls back to this moving average line and holds, it presents an attractive buying opportunity for swing traders, offering a lower-risk entry point in the direction of the prevailing trend.

• Momentum Trading: Pullbacks to rising 50EMA is not the only strategy followed by swing traders. When the uptrend is strong, momentum traders trade bull flags, pullbacks to 10EMA & 20EMA, IV-pause-move and many other setups for short bursts of upswings. Here also, the underlying criteria that the 50EMA should be rising is important.

If you examine the chart of CYIENT Limited, you will see that multiple successful trading setups could have been executed on the rising 50EMA. Conversely, ignoring the declining moving average would have spared the trader from unnecessary stop losses and frustration.

A simple strategy that can enhance the performance of swing traders is to follow the direction of the 50EMA on Nifty500. By staying in the market when Nifty500’s 50EMA is rising and avoiding long positions when it is declining, swing traders can significantly improve their returns.

Pro-Setups and the Rising 50EMA

In the Pro-Setups indicator on TradingView, you see the 50EMA as a green line when it is rising and as a red line when it is declining.

In the Pro-Setups Dashboard, there are options to scan for

• stocks where 50EMA is rising,

• stocks where 50EMA has just turned green in last 2 days, and

• stocks away from 50EMA at a certain percentage distance.

The Rising 50EMA filter can be used as an add-on to your existing scan. Combine it with filters like green trend bars, relative strength, fundamental score, mini coil, Bollinger band width, TTM squeeze etc.

The New Rising 50EMA (in last 2 days) scan gives you those names where 50EMA has turned green in the last 2 days. This enables you to find gainers early.

Stocks away from 50EMA filter lets you find stocks at a certain percentage distance away from 50EMA. This helps in finding stocks with momentum.

Conclusion

The rising 50EMA is a powerful tool in the arsenal of swing and positional traders alike. Its ability to identify trends, confirm pullbacks, and act as a dynamic support level during uptrends provides traders with critical insights for making well-timed trading decisions. By incorporating it into their trading strategies , traders can increase their success ratio.

Remember, a rising moving average line isn’t a guarantee of profit, but it serves as a valuable guide to navigate the market’s currents with greater precision.

Large-cap stocks reflected narrow leadership while the broader market showed stronger conviction demonstrating a recovery in risk appetite among investors despite headline index caution.

Key triggers in the week

• Broad Market Risk Appetite Strengthens: FII selling created an overhang in index heavyweights, but consistent DII absorption limited downside.

• Crude Oil Remains Elevated: Brent holding above $110 remains the key macro risk, keeping inflation expectations, currency pressure, and FII behavior on edge.

• Rupee Under Pressure: The rupee slipping to fresh lows (~₹95/$) reflects persistent external stress and raises the risk of continued FII caution, capping upside in large caps.

Potential catalyst for the next week…

• Crude Oil Remains the Key Variable: A move below $100 could ease inflation and currency pressure, while sustained higher level keeps macro risks elevated.

• Earnings Momentum & Sectoral Cues: · As results gather pace, the focus shifts to margin resilience and demand outlook. Stocks are likely to react more to guidance than reported numbers, driving sharper sectoral rotation..
  
  You can track the Upcoming Results on our “Upcoming Results” menu on the “Financial Insights” tab on our dashboard.

Technical Perspective

• Nifty500 has transitioned from an aggressive ‘V-shaped’ recovery into a healthy consolidation phase. After April delivered one of the strongest monthly performances in recent history, the index is now focused on base-building and structural repair.

• Dynamic Support Defense: The index is currently taking support at a high-probability confluence zone. This area aligns with the rising 50EMA (which has recently turned green) and previous historical support levels.

• Bullish EMA sync: The short-to-medium-term moving averages have returned to a bullish alignment. The 10EMA is now positioned above the 20EMA, which in turn sits above the 50EMA (10EMA > 20EMA > 50EMA).

• After forming a fresh Higher High (HH) following the April rally, the current price action is attempting to establish a Higher Low (HL), confirming that the ‘Buy on Dips’ regime is back in control.

• On the weekly timeframe, the index is successfully re-establishing itself within the broad consolidation range it occupied throughout the latter half of 2025, suggesting a return to long-term structural stability.

• From a medium-term perspective, the market continues to exhibit underlying strength. With 73% of companies trading above their 50EMA, the broader market structure remains intact. The current environment is characterized by selective participation rather than a breakdown, as the majority of the index still holds its primary trend.

• From a short-term view, the market continues to cool off, with the percentage of stocks above the 10EMA slipping (59% currently), though the decline is not sharp compared to last week (60%).

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Trading & Investment Strategy

The market appears to be taking a healthy breather within a broader recovery trend. Medium-term breadth remains strong, while short-term momentum is cooling off as expected. In this phase, it’s better to avoid chasing breakouts aggressively and instead be selective and focus on stocks that are holding key support levels and showing relative strength. New entries should be considered mainly in leading sectors, only after support holds or momentum picks up again, while keeping position sizes controlled during this consolidation.

Summary

Despite the volatility seen on Thursday, the broader market structure remains intact, with no signs of a major breakdown so far. This phase is helping the market build a stronger base after the sharp recovery in April. Staying patient and disciplined is important, as the next clear move is likely to come once this consolidation phase plays out.

Indian benchmark indices ended the week sharply lower, snapping a multi-week recovery amid IT earnings disappointment, geopolitical tensions in the Middle East, rising crude prices and rupee depreciation. Profit-booking after a strong prior rally accelerated the correction. However, mid-cap and small-cap indices proved more resilient. The broader index Nifty500 closed the week down 1.3%, reflecting broad-based weakness tempered by selective buying in value pockets.

Key triggers in the week

• Geopolitical Tensions: Stalled US-Iran talks raised concerns over supply disruptions via the Strait of Hormuz, pushing risk premium higher and triggering a broad risk-off sentiment.

• Rising Crude Oil Prices:
  Brent crude surged from ~$84 to above $100, with markets reacting to the speed and sustainability risk of the move, given India’s heavy import dependence.

• Currency Weakness & FII Outflows:
  The Indian Rupee weakened past ₹94/USD as capital moved into the US Dollar, while the FIIs turned sellers once again with flows gravitating toward stronger momentum markets like the NASDAQ Composite that are making new highs.

• Weak Internals:
  While broad-based selling and breakdowns in market leaders signaled a clear shift to distribution, the Nifty IT Index in particular faced the wrath as it fell over 10%, dragging indices lower.

Potential catalyst for the next week…

• Crude Oil Direction Remains Critical:
  Markets will continue to anchor around crude movement, with any cooling below $100 easing inflation and sentiment concerns, while sustained strength could keep pressure on equities and delay risk-on flows.

• Currency Stability & FII Flows:
  Stability in the Indian Rupee will be key to arrest FII selling, as continued weakness alongside strong momentum in markets like the NASDAQ Composite could prolong outflows.

• Earnings Momentum & Sectoral Cues:
  As results gather pace, focus will remain on margin resilience and forward guidance, with management commentary likely to drive sectoral moves.
  
  You can track the Upcoming Results on our “Upcoming Results” menu on the “Financial Insights” tab on our dashboard.

  

Technical Perspective

• This week, the Nifty500 paused its sharp V-shaped recovery, transitioning into a healthy pullback after the strong rally from early April lows.

• The index is now testing a key support zone marked by the confluence of prior swing levels and the rising 50EMA, which has recently turned supportive (turned green).

• While the 20EMA continues to slope upward, reflecting short-term strength, it remains below the 50EMA - indicating that the broader market structure is still in a recovery phase rather than a confirmed uptrend.

• From a trading perspective, this setup calls for patience, with confirmation required through a sustained hold above the 50EMA before considering fresh directional positions.

• On the weekly timeframe, the index is successfully re-establishing itself within the broad consolidation range it occupied throughout the latter half of 2025, suggesting a return to long-term structural stability.

• Medium-Term Breadth Remains Strong, Short-Term Cooling Visible:
  While ~78% and ~71% of stocks continue to trade above their 30EMA and 50EMA respectively, the sharp drop in stocks above the 10EMA (~60%) indicates a cooling of short-term momentum. This suggests a pause after an extended move rather than a structural breakdown.

• Healthy Reset, Not Distribution: The pullback in short-term breadth reflects a necessary reset from overbought conditions, with broader participation still intact. The absence of a sharp deterioration in 30/50EMA breadth signals that the market is consolidating, not entering a corrective phase.

• Participation and Leadership Still Intact: The continued presence of a high number of >3% movers and strong readings across key breadth indicators indicate that market participation remains broad. This reduces the likelihood of a deep correction, though near-term consolidation remains likely.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Trading & Investment Strategy

The market is undergoing a healthy pause within a broader recovery, with medium-term breadth intact but short-term momentum having it’s much needed cooling. In this environment, traders should shift from aggressively chasing breakouts to a more selective approach, focusing on stocks holding key supports and showing relative strength. Fresh positions are best considered in stocks from the leading sectors only on confirmation of support holds or renewed momentum, while avoiding overexposure during this consolidation phase.

Summary

Despite last week’s volatility, the broader market structure remains constructive, with no signs of a systemic breakdown as yet. The current phase appears to be a necessary reset rather than the start of a deeper correction, allowing the market to build a stronger base. As always, patience and discipline remain key, with the next directional move likely to emerge once this consolidation matures.

Listing: February 2025

Sector: Power

Industry: Power Infra, Trans. Equipment & Services

Business Overview: ⁠Incorporated in 2001, Quality Power Electrical Equipment Limited (NSE: QPOWER) is engaged in the business of energy transition equipment and power technologies. The company provides high-voltage electrical equipment and solutions for grid connectivity and energy transition, specializing in power products across generation, transmission, distribution, and automation sectors. The company manufactures critical high-voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks. These equipment and networks form key components for energy transition from renewable sources to traditional power grids.

Recent Gains: In the last two weeks, the stock has moved up by around 38% (from ₹871.65 on 2nd April to ₹1,206.05 on 17th April).

In this post, we break down the conditions that were present before this move started, and how similar opportunities can be identified for a portfolio.

Here is the recent chart of the company, and highlighted is the move that we are studying.

We will focus on the setup that existed just before the breakout, especially the few days leading up to 2nd April.

Prior Upmove & Base Formation

The stock had already shown strong strength earlier, rallying nearly 300% between April 2025 and September 2025.

After that, it entered a consolidation phase from October 2025, before eventually moving to new all-time highs this week.

During this consolidation, the 50EMA had turned red but recently shifted back to green. Trading on the long side only when the 50EMA is green is a simple but effective way to improve trade quality.

Sector Strength

As of 2nd April, the Power sector was showing strong performance across both 3-month and monthly timeframes, ranking among the top sectors.

• 3-Month RS: 60

• Monthly RS: 66

While the sector was already strong, QPOWER was relatively quiet - a common sign of stocks preparing for a move.

Relative Strength against other stocks

• On 2nd April, QPOWER showed strong relative strength across multiple timeframes, even as the broader market was weak:

  • 1 Week RS: 74

  • 1 Month RS: 84

  • Quarterly RS: 96

• A Quarterly RS of 96 means that the stock outperformed 96% of the stocks in our trading universe, while only 4% outperformed it.

  Relative Strength (RS) Rating

Relative Strength vs Nifty 500

• In March, the broader market declined by more than 10%, but QPOWER remained largely flat - a strong sign of resilience.

• At the same time, its RS line started making new 21-day highs even before price did. This early strength often signals potential leaders.

• This is where relative strength becomes most useful. When the market is weak, instead of sitting idle, the focus should be on stocks that are holding up well. These are often the ones that lead the next upmove.

Relative Strength (RS) Line

Technical Factors

• Green trend on Daily timeframe (Weekly trend was Yellow because of limited trading history of the stock necessary for its calculation).

• Rising 50EMA. A simple way to manage risk is to only consider long positions when the 50EMA is rising.

Importance of Rising 50EMA

• TTM Squeeze signaled that pressure was building up, and once the stock started moving, that built-up energy got released. While not a critical factor, it added extra strength to the setup.

TTM Squeeze

Fundamental Factors

• Fundamental Score: 88

  

  The Fundamental Score is our proprietary rating, built on the company’s quality and its recent growth. A high score indicates that the company meets the key financial metrics typically used for fundamental evaluation.

  Read more about Fundamental Score

• Valuation Grade: A+

  Pro-Setups proprietary valuation grading rates stocks from A+ to E, where A+ represents the most attractive valuation and E signals the least.

  Valuation Grading

• Company qualified for Easy Earnings Comparison filter. This is one of the most important fundamental filters. Companies that satisfy this criteria can report blockbuster earnings in the upcoming quarterly results.

  Easy Earnings Comparison

What Happened Next

Following the easing of tensions between the United States and Iran after the ceasefire around 7-8 April, global sentiment improved and markets started to recover. As the broader market picked up post 6th April, QPOWER responded strongly, rallying over 38% in a short span. This move clearly showed how all the factors in the setup - sector strength, relative strength, fundamentals, and technical structure came together and played out effectively once the market environment turned supportive.

How can Pro-Setups Help to Identify such Setups

Identifying such high-quality setups manually can be time-consuming and often inconsistent. This is where the Pro-Setups Dashboard makes the process much simpler and more structured.

All the key factors we discussed - whether it is sector strength (Sectoral RS), stock-specific Relative Strength, or technical signals like Green Trend, Rising 50EMA, RS Line, and TTM Squeeze, are readily available within the dashboard. On top of that, important fundamental filters such as Easy Earnings Comparison and Valuation Grade are also built in.

You can bring all these conditions together in one place and quickly narrow down stocks that meet your criteria. This helps you focus only on those names that are quietly building strength, even before the move becomes obvious.

If you are serious about finding strong setups early, the Pro-Setups Dashboard can significantly improve both your speed and decision-making. Use the link below to subscribe to Pro-Setups today!

Use code JOINNOW for 20% Discount

Which stock, in your view, deserves the title of Chart of the Week? Let’s discuss your picks, ideas, and reasoning in the Pro-Setups Discussion Group and learn together!

The Indian equities extended their strong gains for a second straight week, driven by a sharp improvement in global risk sentiment. Easing geopolitical tensions in the Middle East triggered a notable correction in crude oil prices - an important tailwind for an import-dependent economy like India. Falling yields and a steady foreign inflows further supported the move. Notably, the rally broadened meaningfully, with mid- and small-cap indices outperforming benchmarks, signaling a revival in risk appetite rather than a narrow large-cap led bounce.

Key triggers in the week

• Geopolitical De-escalation: The announcement of a ceasefire between Israel and Lebanon, coupled with reports of potential progress in U.S.-Iran talks, significantly boosted global risk appetite.

• Softening Crude Oil Price: Brent crude fell to around $85 per barrel from the highs of $113 since the Middle East tensions started. For an import-dependent economy like India, this eased pressure on the rupee.

Potential catalyst for the next week…

• Crude oil trajectory remains the fulcrum: Markets will closely track developments in the Middle East, but the real catalyst is the crude. Any material progress that contains the supply risks could push oil prices lower, reinforcing the current risk-on sentiment. Conversely, any escalation or breakdown in diplomacy that threatens supply could quickly reverse flows, making crude the single biggest macro risk to the ongoing rally.

• Liquidity and flows- silent but decisive: With FIIs showing signs of stability, their continuation (or reversal) will be crucial in sustaining market momentum. Domestic flows remain supportive, but incremental upside from here will likely need confirmation from sustained FII participation.

• Earnings quality over earnings growth: As the results season gathers pace, the focus will shift to the quality of earnings - margin resilience, demand commentary, and forward guidance for FY27. Management cues on input cost trends and supply-chain stability, especially in the context of recent geopolitical volatility, will play a critical role in shaping sectoral leadership.
  
  You can track the Upcoming Results on our “Upcoming Results” menu on the “Financial Insights” tab on our dashboard.

Technical Perspective

• The Nifty500 has staged a strong recovery this week, reclaiming its 20EMA and 50EMA while also breaking above the March swing highs - signaling a return of short-term bullish control.

• However, the broader structure is still in repair. Despite the 10EMA turning up and crossing above the 20EMA, both remain below the 50EMA, indicating that this is an early-stage recovery rather than a confirmed uptrend.

• For traders, this suggests a “buy on dips, avoid chasing” environment until the trend strengthens further.

• Weekly chart: The index is now reestablishing itself within the broad consolidation range it occupied during the latter half of 2025.

• Market breadth remains exceptionally strong, with 96% of stocks above the 10EMA, reflecting sustained short-term momentum. More importantly, participation has expanded meaningfully across timeframe - stocks above the 30EMA have risen to 93% (from 82%), while those above the 50EMA have surged to 83% (from 62%), confirming a broad-based strengthening of the underlying trend rather than a narrow, large-cap led move.

• That said, such elevated breadth readings also push the market into a near-term overbought zone. While the trend remains resilient, the risk of short-term exhaustion is rising, suggesting a pause or consolidation is more likely than a continued vertical move, and chasing strength at this stage carries unfavorable risk-reward.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Trading & Investment Strategy

The market’s sharp two-week rally is encouraging, but a move of this magnitude will eventually need rest. The market will either work off its extension by moving sideways or price-correct with a pullback before the next leg higher. Either outcome would be healthy and improve the longevity of this upswing. Chart structures still need more time to form constructively, most stock charts show V-shaped price movement. Breadth indicators have entered potential overbought territory - a sign of likely exhaustion ahead. Conservative swing traders should patiently wait for quality setups to emerge post-consolidation. Avoid FOMO and chasing prices here; instead, plan entries on the next pullback or sideways consolidation.

Summary

Improving geopolitical sentiment has turned into a meaningful tailwind for equities. Against that backdrop, Indian equity market is showing an aggressive short-term bullish structure, and the jump in the % of the stocks trading above their 50EMA suggests this rally is being supported by broad participation. Even so, after such a sharp move, the market looks extended and likely needs time to digest gains. That can happen either through sideways consolidation (a.k.a Time correction) or a pullback (a.k.a Price correction), both of which would be healthy for sustaining the next leg higher.

With many stocks showing V-shaped recoveries and breadth entering potentially overbought territory, conservative traders and investors should avoid chasing strength and wait for better risk-reward entries after some cooling off.

The Indian equity markets staged a spectacular recovery this week, snapping a grueling losing streak since the start of 2026 to post their best weekly performance since February 2021. The rally was primarily fueled by a fragile and yet, a dramatic de-escalation in West Asian tensions after the U.S. and Iran agreed to a two-week ceasefire, coupled with a neutral and supportive stance from the RBI’s Monetary Policy Committee. For the week, the Nifty 500 index delivered a robust performance, closing 6.7% higher, reflecting a broad-based participation across the market cap segments, with the Midcap index clearly taking the lead with a gain of 7.6%.

Key Indices Performance

Key triggers in the week

• Geopolitical De-escalation: The primary catalyst was the announcement of a two-week truce between the U.S. and Iran. This significantly lowered the “risk-off” sentiment globally, leading to a sharp cooling of crude oil prices from over $111 to the $95–$97 range. Since India is a major oil importer, this stability provided a massive tailwind for domestic macro-stability and equity valuations.

• RBI Monetary Policy Stability: The Reserve Bank of India (RBI) maintained the repo rate at 5.25% and shifted to a ‘Neutral’ stance, further aiding the positive sentiment.

Potential catalyst for the next week…

• Islamabad Diplomatic Talks: Markets will closely monitor the upcoming diplomatic discussions in Islamabad, led by U.S. Vice President JD Vance and Iranian officials. The outcome of these talks will determine the durability of the current ceasefire and whether a long-term regional peace framework is viable.

• Q4 FY26 Earnings Momentum: The earnings calendar intensifies next week with heavyweights like Wipro (April 16) and HDFC Bank (April 18) scheduled to report. Investors will scrutinize management commentary regarding demand outlook for FY27 and the impact of recent geopolitical volatility on supply chains.
  
  You can track the Upcoming Results on our “Upcoming Results” menu on the “Financial Insights” tab on our dashboard.

Sectoral Snapshot: Leadership & Momentum

Technical Perspective

The Nifty 500 has demonstrated a strong “V-shaped” recovery, closing the week at approximately 22,130. On the weekly chart, the index formed a commanding bullish candlestick for the first time in 2026. This suggests that the corrective phase, which saw the index drop significantly from its 52-week high of 24,144, has most likely found a definitive floor.

Breadth Comparison & Inference

The Nifty 500 is currently witnessing a notable momentum shift in short-term participation that suggests an improvement in market sentiment, where stocks are reclaiming their near-term levels. Currently 95% of the stocks are trading above their 10EMA, compared to just 59% last week, while 82% of the stocks are trading above their 30EMA, compared to just 25% last week. This indicates that while the Nifty500 is yet to stage a clear uptrend structure, a recovery is taking root from the bottom up.

Structural Health and Technical Inferences

As per our technical rules, the market has officially regained its structural strength, as the percentage of stocks above the 50-day EMA is now comfortably above the crucial 50% level. This marks a decisive shift from the fragile structure observed at the start of the week. Furthermore, Since participation levels across the 10, 30, and 50-day EMAs are above the 15% mark, the Nifty500 is classified as to have moved out of the oversold zone.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Trading & Investment Strategy

• While the market breadth has improved notably, the Sharp V shaped recovery last week and as Nifty500 is just around the previous Support turned Resistance zone, some “cooling off” can be expected in the early part of next week. Potentially, the market may do a retracement, clock a Higher Low, before attempting to take over this resistance levels.

• Given March’26 results are expected in the coming week, traders can look to take advantage of the filter “Results Impact on Price” and focus on stocks filtered through Easy Earnings Comparison and Power Earnings Gap filters on the “Financial Filters” on the Pro-Setups Dashboard. You can learn more on how to trade EEC stocks from this blog Identify Tomorrow's Earnings Rockstars today.

• Swing Traders: Given the higher % of stocks above the 10EMA and 30EMA, it might be a better approach to wait for pullback in leading stocks instead of chasing them at the current levels.

• Positional Traders: Traders/Investors with a longer term horizon may still choose to stay on the sidelines and wait for Nifty500 to get a clear uptrend structure of Higher High, Higher Low before committing their capital. It’s best we do not fall for FOMO and chase these initial rally but instead wait for the confirmation. If the uptrend did happen, it is going to be a long game and so missing these initial rally is not a bad thing at all. It’s best to be conservative in the beginning and go full throttle once we have a signal of a clear uptrend than fall for the FOMO and chase every move and get chopped out.

Summary

While the market breadth has shown signs of strength and giving hope that the bottom has been made, the fragility of the geopolitical peace and the resultant impact on our larger economy and on the market, calls for a careful and staggered approach to committing capital. With the results starting to pour in, Investors should stay selective, focusing on high-quality names with strong valuation comfort while allowing the market to prove its intent through sustained follow-through.

Key Indices Performance

The standout divergence came from Nifty SmallCap 250, that closed in the green at +0.5%, signaling selective buying interest in the small-cap space even as large and mid caps faced selling pressure.

With the recent correction, many small-cap stocks are now available at attractive valuations compared to their earlier premiums, making them increasingly appealing to investors looking to build positions at more reasonable entry points. To put this in perspective, there were 341 companies on March 4 that had a valuation grading of A and A+ combined. That list has soared to 454 companies on April 4 - a clear sign that the correction has opened up a wider pool of fundamentally sound stocks trading at compelling valuations.

Read more about our proprietary Valuation Grading score in the links mentioned below.

Key Drivers for the Market

Overall sentiment remained weak, with the Middle East conflict and sharp moves in energy prices keeping risk appetite in check. Major global markets, including the US and other developed economies, also ended the week on a mixed to negative note.

• Geopolitical Escalation in West Asia: The ongoing US-Israel conflict with Iran, now in its fifth week, continued to escalate, keeping uncertainty elevated. Any further escalation or a potential de-escalation in the US-Iran conflict will remain the biggest driver for global oil prices and equity sentiment in the coming days.

• Rupee Recovery & RBI Intervention: The Indian rupee staged a dramatic recovery this week, appreciating by over ₹2 to close at 92.67 driven by RBI’s strategic actions to curb speculation and volatility. This rupee strength provided a much-needed circuit breaker to the downside and triggered a sharp recovery in market on Thursday.

• Crude Oil Price Shock: After falling to $97 per barrel this week, crude prices climbed back above $106 per barrel. For India, higher oil prices increase the import bill, push inflation higher, and put pressure on corporate margins leading to a negative impact on market sentiment.

• RBI MPC Meeting (April 6-8): The Reserve Bank of India's first policy meeting of FY27 is the primary domestic trigger. Markets are closely watching RBI’s commentary for any shift in the neutral stance or guidance on liquidity management given the recent spike in crude-led inflation.

• Corporate Earnings Season Kick-off: With the financial year coming to a close, focus now shifts to corporate earnings. Investors will closely track how companies performed in the last quarter of FY26 and how they factor in rising energy costs and currency weakness while giving guidance for FY27.

Technical Perspective

• Establishment of Lower Low (LL): Nifty500’s recent price action has established a fresh Lower Low (LL).

• Strong Resistance from 10EMA: The Nifty500 continues to show strong downward momentum, repeatedly facing resistance near the falling 10EMA..

The reason we track Nifty500 is because it represents over 90% of the free float market capitalization, making it a comprehensive barometer of market health.

Breadth Comparison & Inference

The Nifty 500 is currently witnessing a notable momentum shift in short-term participation. At present, 59% of stocks are trading above their 10EMA, a sharp climb over the 19% seen a week ago on March 28. This surge suggests an early improvement in market sentiment, where stocks are beginning to reclaim near-term levels even as the index price remains lower than its previous weekly close. The medium-term health is also showing signs of life, with 30EMA participation rising to 25%, compared to 14% last week. This indicates that while the broader trend has been under pressure, a recovery is attempting to take root from the bottom up.

Structural Health and Technical Inferences

When analyzing the deeper framework, the market continues to exhibit a fragile structure. Currently, only 19% stocks are trading above their 50EMA. Based on quantitative benchmarks, because this figure remains significantly below 50%, the market fundamentally lacks structural strength. This disparity between short-term momentum (59% above 10EMA) and long-term health (19% above 50EMA) indicates that the recent recovery is likely driven by tactical mean-reversion rather than broad-based institutional accumulation. Since participation levels across the 10, 30, and 50-day EMAs are no longer all below 15%, the index is no longer classified in a potential oversold zone.

Summary of Nifty500 Performance

The Nifty500 ended the week at 20,938, a 0.4% decline from previous week’s 21,020. While we see a clear breadth expansion in short-term indicators, the “Curtail” signal on the index’s 10EMA vs 20EMA crossover serves as a lack of confirmation for a primary trend reversal. In essence, we are seeing a gradual improvement in daily participation, but the underlying weakness in the 50EMA suggests the broader trend remains cautious. For this move to be sustainable, we require a strong follow-through that pushes more stocks back above their long-term averages.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Execution Alpha: For the disciplined investor, the priority is to identify high-quality names with healthy valuation comfort (Valuation Grade A+, A and B+ in the Pro-Setups Dashboard) that have maintained relative strength despite the broader index breakdown.

Summary

While short-term breadth indicators are showing signs of improvement, the broader market structure remains fragile with the index still lacking structural strength. That said, there is a degree of softness in the bearish narrative as the market appears to be attempting a rise from the bottom up. However, for this recovery to gain credibility, Nifty500 must first navigate a series of overhead hurdles - the immediate resistance lies at the declining 10EMA, followed by the 20EMA and 50EMA, each of which needs to be reclaimed convincingly.

Until these key moving averages are cleared and we see a meaningful expansion in 50EMA participation, the bias remains cautiously defensive. Investors should stay selective, focusing on high-quality names with strong valuation comfort while allowing the market to prove its intent through sustained follow-through.

In the first part of our valuation series, we explored why Growth and Return on Equity (RoE) are crucial for decoding valuation, along with the limitations of the PEG ratio. If you missed the first part, you can catch up in the below mentioned link.

This second part of our valuation series moves beyond the basics to introduce a more robust way of blending growth and RoE to spot attractively priced companies.

The Pro-Setups Approach: Beyond the PEG Ratio

At Pro-Setups, we address the limitations of PEG Ratio by adjusting traditional valuation multiples using both a company’s 3 years Average RoE and its weighted average sales growth.

We call these Adjusted Valuation Multiples. By dividing the traditional valuation multiples by a combination of a company’s average RoE and weighted sales growth, we create a more accurate picture of ‘fair value’.

In simple terms, the adjusted valuation multiples are:

The Rule of Thumb: The lower the adjusted ratio, the more reasonable the valuation is relative to the company’s peer group.

Why use Adjusted Multiples?

• These ratios combine Valuation (market sentiment) with Sales Growth (operational traction) and RoE (profitability efficiency).

• These ratios could help identify undervalued firms with strong sales momentum and efficient capital utilization.

• Integrates profitability (ROE) and growth (sales) to avoid overpaying for companies with high multiples but weak fundamentals.

• Averaging RoE smooths one-time distortions, while sales growth is harder to manipulate than earnings.

What High vs. Low Adjusted Valuation Ratios Reveal

A high adjusted valuation ratio indicate that the current valuation is not justifiable either because of:

• Unreasonable Market Sentiment: Elevated valuation multiples not supported by fundamentals or growth.

• Weak Profitability: Low RoE reduces earnings efficiency, making high valuation unsustainable.

• Slower growth rates fail to justify premium valuations, even in high-margin sectors.

A low adjusted valuation ratio indicates that the current valuation is attractive and justifiable because of:

• Rational or Undervalued Market Sentiment: Valuation multiples are well-supported or even surpassed by the company’s underlying fundamentals and growth trajectory.

• Strong Profitability: A high Average RoE enhances earnings efficiency, making the current valuation sustainable and potentially undervalued.

• Robust Growth: Strong sales growth rates fully justify current premiums and signal a company with significant market traction.

Case Study: Asset Management Companies (AMC)

Let’s go back to the case study illustrated in Part I of this valuation series. We noticed how UTIAMC at a P/E of 15.7x appeared to be the cheapest stock, but was actually a value trap. On the other hand, ICICIAMC at a P/E of 41.2x, looked expensive but deserved to get high premium from the market.

By dividing traditional valuation multiples by a combination of Average RoE and Growth, we get a clearer picture of which companies offer the best value for their performance. See the table below:

• ICICIAMC’s adjusted P/E to Avg RoE & Growth is only 2.3x, which is the lowest positive ratio among all its peers. It earns its premium by delivering superior performance, making it deserving candidate for a higher valuation tag.

• On the other hand, UTIAMC’s negative adjusted ratio signals that either the RoE or weighted avg. growth is in negative territory and hence it’s not as good as option to invest compared to its peers, until it starts showing positive performance.

• CRAMC: Offers the next best value after ICICIAMC.

• HDFCAMC and NAM-INDIA: Are solid but significantly more expensive relative to their performance than the leaders.

• ABSLAMC: Though its raw P/E multiple is lower than HDFC, its high adjusted ratio of 12.1x shows you are paying a much higher price for every unit of growth and efficiency you receive.

• Same interpretation can be drawn using other adjusted valuation multiples too.

A stock like ICICIAMC may carry a high premium, but its lower adjusted ratios relative to its peer group prove it is actually the more attractive investment. Ultimately, the goal is to find companies where you get the most growth and efficiency for every rupee invested.

Visualizing Value: The Bubble Chart

Wondering if this can be visualized for better clarity? Absolutely!

To make this data actionable, the Pro-Setups Dashboard uses bubble charts to plot performance:

• On the y-axis, we have the weighted average sales growth, where companies with higher growth appear at the top.

• On the x-axis, we plot the 3-year average Return on Equity, with companies having higher RoE positioned further to the right.

• The size of each bubble represents the valuation multiple (like P/E to average RoE & growth). A smaller bubble indicates a better, more attractive valuation.

Pro-Tip: The most attractively valued company will have the smallest bubble and be located in the extreme top-right corner of the chart.

In the chart above, ICICIAMC is positioned on the top-right of the chart and has smallest bubble compared to its peers. This suggests that it is actually cheapest in terms of valuation compared to others, when adjusted for growth and RoE.

CRAMC, NAM-INDIA, HDFCAMC and ABSLAMC are hanging out in the middle, but CRAMC has the smallest bubble size among these four, and hence offers higher value too. ABSLAMC, on the other hand, has biggest bubble size and hence it is expensive in adjusted terms.

UTIAMC growth rate is negative, and hence its bubble size is irrelevant and offers lowest value among the entire peer group.

The above bubble chart can be seen for other adjusted valuation multiples too and is available in the Peer Comparison page under Financial Insights in the Pro-Setups Dashboard.

Simplifying Discovery: Valuation Grading

Visualizing data is great, but filtering through hundreds of stocks or multiple sectors requires speed. We have simplified this into a Valuation Grade (A+ to E) based on how a stock stacks up against its sector peers.

• We benchmark every stock against its peers, assigning scores based on their specific adjusted valuation multiples.

• These marks are then distilled into a final grade ranging from A+ to E, where A+ represents the most attractive valuation and E signals the least.

  • A+: Exceptional Value

  • A: High Value

  • B+: Good Value

  • B: Fairly Priced

  • C: Expensive

  • D: Overpriced

  • E: Value Trap

Lets look at the valuation grades of the Asset Management Companies illustrated above.

The Efficiency Leaders (Grade A)

• ICICIAMC & CRAMC: Both companies secure an ‘A’ grade. These companies offer the most compelling value proposition because they provide the best performance relative to their growth rates and operational efficiency.

The Middle Ground (Grade B)

• HDFCAMC, NAM-INDIA & ABSLAMC: These industry mainstays fall into the ‘B’ grade category. While these are fundamentally solid companies, their adjusted ratios reveal they are more expensive for every unit of growth achieved when compared to the top-tier leaders.

The Underperformers (Grade D/E)

• UTIAMC: This stock is assigned a ‘D’ grade primarily due to its negative growth.

• It’s important to note the severity of these grades. Had the company reported negative Return on Equity (RoE), it would have dropped to an ‘E’ grade.

You can find these readymade filters on the Pro-Setups Dashboard to identify top-tier value with a single click.

Conclusion

In this valuation series, we have unpacked why traditional valuation metrics like P/E, P/Sales etc. or even PEG ratio fall short, revealing the power of blending average RoE with weighted sales growth for finding attractively valued companies. Adjusted Valuation Multiples - dividing traditional valuation ratios by growth and RoE - expose undervalued gems and value traps, as lower adjusted ratios signal better value relative to peers.

The Pro-Setups Dashboard simplifies valuation comparison by offering bubble charts for instant visual screening of how a company fares within its sector, as far as its growth, RoE and adjusted valuation multiples are concerned. By utilizing Valuation Grades (A+ to E) to benchmark stocks against their peers, investors can filter high-grade opportunities across hundreds of names with a single click.

Arm your trading with this framework via Pro-Setups - spot attractive opportunities efficiently and trade smarter in Indian markets.

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Key Indices Performance

Key Drivers for the Market

Overall sentiment remained weak, with the Middle East conflict and sharp moves in energy prices keeping risk appetite in check. Major global markets, including the US and other developed economies, also ended the week on a mixed to negative note.

• Geopolitical Escalation in West Asia: The main trigger for this volatility continues to be the ongoing tensions between the US, Iran, and Israel, which have now entered the fourth week, keeping uncertainty elevated.

• Crude Oil Price Shock: After falling to $92 per barrel, crude prices climbed back above $110 per barrel amid fears of supply disruption. For India, higher oil prices increase the import bill, push inflation higher, and put pressure on corporate margins leading to a negative impact on market sentiment.

• Rupee Volatility: The Indian Rupee fell to a new record low, slipping past ₹94.75 per US dollar.

• Corporate Earnings Season Kick-off: With the financial year coming to a close, focus now shifts to corporate earnings. Investors will closely track how companies performed in the last quarter of FY26 and how they factor in rising energy costs and currency weakness while giving guidance for FY27.

Technical Perspective

• Establishment of Lower Low (LL): Nifty500’s recent price action has established a fresh Lower Low (LL).

• Strong Resistance from 10EMA: The Nifty500 continues to show strong downward momentum, repeatedly facing resistance near the falling 10EMA..

The reason we track Nifty500 is because it represents over 90% of the free float market capitalization, making it a comprehensive barometer of market health.

Breadth Comparison & Inference

The market experienced a sharp erosion in its breadth, wiping out the temporary gains seen mid-week. While Wednesday showed a flash of hope with 43% of stocks trading above their 10EMA, that momentum has completely vanished, with only 19% remaining above that level by the end of the week. Compared to last Friday (20th March), when 26% of the stocks held above their short-term EMAs, current data confirms a significant deterioration in sentiment. This downward shift suggests that the mid-week recovery was a fleeting moment of selective participation rather than a sustainable shift in the broader market.

Strategic Interpretation:

• Structural Health: From a technical perspective, the index appears to be structurally weak. With a mere 13% of stocks trading above their 50EMA, the vast majority of the market is in a primary downtrend. This is a concerning drop from the 17% seen on Wednesday and sits even lower than last week’s 16% reading. When such a small fraction of the market holds its long-term trend, the underlying environment remains inherently fragile. The ‘Curtail’ signal on the 10/20 EMA crossover remains persistent, acting as a red flag for any aggressive positioning.

• Near Oversold, but not there yet: While the 30EMA and 50EMA metrics have both slipped into deep distress at 14% and 13% respectively, the 10EMA still sits slightly higher at 19%. Because all three metrics are not yet simultaneously below 15%, the market has not officially entered a potential oversold zone. This indicates that while the selling has been intense, we haven't quite reached the point of final exhaustion or capitulation.

• Execution Alpha: For the disciplined investor, the priority is to identify high-quality names with healthy valuation comfort (Valuation Grade A, A+, B and B+ in the Valuation Grade in the Pro-Setups Dashboard) that have maintained relative strength despite the broader index breakdown.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

High returns and fast growth are the engines of valuation. To find a true winner, you have to look at how much a company earns on its capital (ROE) and how fast it is moving (Growth). Read Part I of our article on Valuation’s Dynamic Duo: Why RoE and Growth Rates Matter.

Summary

The combination of a fragile structure and the rapid evaporation of short-term momentum suggests that the index is struggling to find stable footing. Until we see a broad-based expansion in the number of stocks reclaiming their moving averages, the outlook remains defensive with a focus on risk mitigation. Investors should remain cautious; until we see a meaningful crossover of the 10/20EMA on Nifty500 and a surge in 50EMA participation, the bias remains titled to the downside.

The current outlook continues to favor capital preservation and defensive positioning until key resistance levels and moving average crossovers are reclaimed.

Would you rather own:

(i) Company A, that makes makes 25% return on equity, growing at 15% every year; or

(ii) Company B, that makes 10% return on equity, growing at same level as A?

Most rational business owners would prefer Company A, because higher returns on equity create more value over time.

Now take the idea one step further. Would you rather own:

(i) Company A, that makes 25% return on equity, growing at 15% every year; or

(ii) Company C, that makes same return on equity (25%) as Company A, but growing by 30% every year.

In that case, Company C which is the faster-growing business deserves the edge, and a better valuation multiple too.

That is the core message of this framework: Companies with higher Return on Equity and stronger growth rates usually deserve higher (not insane) valuation multiples.

Why ROE and Growth matter

Investors often use ratios such as P/Sales, P/E, P/B, EV/EBITDA, or even PEG to judge whether a stock is expensive or cheap. But these metrics, when viewed in isolation, can be misleading because they do not fully capture the quality of the business behind the valuation.​

• RoE tells us how efficiently a company uses shareholder capital to generate profits.

• Growth tells us whether the business is expanding its market opportunity and compounding that into larger earnings over time.

When both are strong, the market often rewards the company with a premium valuation and that can get super performance in stock returns for the investors.​

While quantitative metrics like ROE and Growth Rate gives a fair idea of the valuation of a specific stock, one also needs to consider a host of other qualitative metrics such as, but not limited to, company size, relative competitive positioning, management quality, Industry cycles stages etc., before identifying a stock as a potential investment candidate.

RoE and Valuation

Return on Equity is one of the clearest indicators of business quality. High RoE reflects efficient capital use, which is why such companies often command premium valuations. This is also why firms in the same industry trade at different P/E or P/B multiples. However, RoE alone isn’t enough - without sustained growth, even a high-RoE business may not justify a rich valuation.

Growth completes the picture

Growth is the second half of valuation. When returns on capital are similar, the faster-growing company typically deserves a higher multiple due to stronger future earnings potential. This is why growth businesses often appear expensive - investors are paying for what earnings can become, not just what they are today.

As Peter Lynch notes in One Up on Wall Street, the real opportunity lies in companies that combine strong profitability with sustainable growth.

Price/Earnings-to-Growth (PEG) Ratio

Before building a broader valuation framework, it is useful to understand one of the market’s most popular valuation tools: the PEG ratio. The PEG ratio, or Price/Earnings-to-Growth ratio, improves upon the traditional P/E multiple by bringing growth into the picture.​

PEG Ratio = P/E Ratio divided by expected earnings growth rate

The PEG ratio is particularly useful for comparing companies within the same industry but with different growth rates, allowing investors to assess relative value more effectively than with the P/E ratio alone. In general, a PEG below 1 may suggest undervaluation, while a PEG above 1 may suggest overvaluation.

However, PEG ratio misses the important element of Return on Equity. Two companies may have similar P/E multiples and similar growth rates, but if one generates much higher RoE, it is clearly the superior business. PEG would treat them similarly, even though their business quality is not the same.

A more practical framework is to adjust valuation multiples not only for growth, but also for RoE. In other words, instead of asking whether P/E is justified by growth alone, the better question is whether valuation is justified by both growth and quality of returns.

Refining the Inputs: Why We Use Sales Growth and Average RoE

To make this framework truly robust, we apply two critical adjustments:

• Prioritizing Sales Growth over Earnings:

  • The traditional PEG formula uses Expected Earnings Growth Rate. Future earnings growth projections are often speculative, analyst-dependent, or influenced by management’s overly optimistic guidance. Using actual historical sales growth provides a more objective, verifiable foundation. So we assign a higher weightage to the most recent quarter and lower to the previous quarter.

  • Further, Sales growth rate is often a more reliable metric than earnings growth rate for assessing a company’s market traction, scalability, and operational efficiency. Sales growth directly measures a company’s ability to increase revenue from its core operations, unlike earnings, which factor in expenses and accounting adjustments such as depreciation or one-time adjustments. A 20% sales growth rate signals rising customer adoption, even if earnings are temporarily depressed due to reinvestment.

• Averaging RoE for Stability:

  • Rather than looking at just the last year’s RoE, we use average RoE of the last few years. This captures a company’s ability to generate returns across different market conditions and operational cycles, smoothing out one-time distortions.

Case Study

Let’s explore the relationship between valuation multiples (P/E) and fundamental quality (ROE and Growth) across six major Asset Management Companies listed in India.

At first glance, UTIAMC appears to be the cheapest stock in the sector with a P/E of 15.7x, while ICICIAMC looks expensive at 41.2x. However, a quick look into the fundamentals reveals why the market has assigned these specific price tags.

a) The High-Performance Leader: ICICIAMC

ICICIAMC commands the highest valuation in the peer group for a clear reason: Capital Efficiency with Growth.

• Massive ROE: At 77%, its return on equity is nearly triple that of most peers.

• Resilient Growth: It maintains a robust sales growth of 23%.

• The Verdict: The market is willing to pay a premium (41.2x P/E) because the company generates world-class returns on every rupee of capital invested.

b) The Value Trap: UTIAMC

Conversely, UTIAMC’s low P/E is not a discount - it is a reflection of underperformance.

• Low Efficiency: A 16% ROE is the lowest in the group, suggesting it struggles to generate significant profit from its equity base, compared to its peers.

• Growth Struggles: With a growth of -22% and only 1% in last two quarters, it is lagging far behind the industry average.

• The Verdict: A low multiple of 15.7x is the market’s way of discounting a business with stagnant growth and low capital efficiency.

c) The Middle Ground: CRAMC, HDFCAMC, NAM-INDIA and ABSLAMC

The other four companies offer a somewhat balanced profile as far as their ROE profile is concerned. While their ROEs are relatively consistent (27%-34%), their paths diverge once growth is factored in.

• With its robust 25% growth in the latest quarter, CRAMC’s valuation becomes attractive at 22x PE multiple.

• HDFCAMC and NAM-INDIA offer steady, predictable performance with similar growth rates and valuation.

• However ABSLAMC’s low growth rates gets penalized to result into a lower P/E multiple (25.2x) because capital efficiency without meaningful growth is not acceptable to investors seeking premium returns.

Coming Next in Part 2: The Pro-Setups Advantage

High returns and fast growth are the engines of valuation. To find a true winner, you have to look at how much a company earns on its capital (ROE) and how fast it is moving (Growth).

In Part 2, we will show you how Pro-Setups does this hard work for you. We make it easy for our members to see which stocks are attractively priced and which ones are overpriced. Stay tuned to see how we turn all what you read today into actionable insights.

Key Indices Performance

Key Drivers for the Market

• Geopolitical Escalation in West Asia: The primary catalyst for the market volatility and under-performance continue to be the intensification of the conflict in West Asia, involving Iran, Israel, and the United States. The fear of a wider regional war disrupted sentiment, leading to a visible lack of buying conviction even during dips. Any signs of de-escalation or, conversely, new sanctions or military movements will be the #1 driver for global markets.

• Crude Oil Price Shock: Brent crude prices surged back above the $110/barrel mark due to fears of a supply crunch and the potential closure of the Strait of Hormuz. Higher oil prices directly hurt India’s import bill, a negative inflationary outlook, and eventual pressure on the corporate margins, amplifying the market’s downside reaction.

• Rupee Volatility: The Indian Rupee plummeted to a fresh record low, crossing over ₹93.5/USD.

Technical Perspective

• Establishment of Lower Low (LL): Nifty500’s recent price action has established a fresh Lower Low (LL).

• Support Zone Broken: The Nifty500’s earlier support zone around 22,400-22,500 has been breached.

• Death Cross: We made a death cross on Nifty500 last week. A death cross is a situation when 50EMA crosses under 200EMA, and it is considered negative in trading community. If history is to repeat again, then most market bottoms are formed within a couple of months of a death cross.

The reason we track Nifty500 is because it represents over 90% of the free float market capitalization, making it a comprehensive barometer of market health.

Breadth Comparison & Inference

The data suggests that while we have moved away from the capitulation lows seen last week - where all breadth metrics were sub-15% - the current bounce lacks broad-based participation. The minor uptick in short-term momentum is not yet reflected in the medium-term trend, indicating this may be a relief rally within a larger downtrend.

Strategic Interpretation:

• Structural Health: Currently, only 16% of stocks are trading above their 50EMA. Since this is significantly below the 50% threshold, the market lacks structural strength. The dominant trend remains bearish, with the ‘Curtail’ signal on the Nifty500 (10EMA < 20EMA) confirming that selling pressure persists at higher levels.

• Out of Oversold: Last week, the market was in a clear oversold zone as participation across the 10, 30, and 50EMAs fell below 15%. While we have technically moved out of that extreme oversold territory, the recovery remains shallow. The 30EMA participation sits at just 17%, confirming that the medium-term trend is still struggling to gain any real traction.

• Execution Alpha: For the disciplined investor, the priority is to identify high-quality names with healthy valuation comfort (Valuation Grade A, A+, B and B+ in the Valuation Grade in the Pro-Setups Dashboard) that have maintained relative strength despite the broader index breakdown.

Accessing Market Breadth on Pro-Setups Dashboard is available for all readers. Click on the link below.

Market Breadth on Pro-Setups Dashboard

Summary

With less than 17% of the universe maintaining their 50EMA, There is an absence of broad-based participation. Currently, the recovery is driven by narrow leadership that also lacks the follow through. Hence, we are observing a fragile technical structure that is attempting a bounce from oversold levels, but without a significant expansion of participation above the 50EMA, the path of least resistance to the upside remains under pressure. Investors should remain cautious; until we see a meaningful crossover of the 10/20EMA and a surge in 50EMA participation, the bias remains titled to the downside.

The current outlook favors capital preservation and defensive positioning until key resistance levels and moving average crossovers are reclaimed.