When a stock experiences resistance on a particular level with volume staying on the higher side and the price position is in the overbought sentiment, market participants typically look for profit-booking opportunities.
The Relative Strength Index (RSI) is a technical indicator that identifies overbought and oversold stocks on a scale of 0 to 100. When a stock crosses 70 value, the sentiment is said to have attained an overbought outlook. This suggests profit-booking and shorting opportunities.
Given this, around 44 stocks in Nifty 500 index are struggling to move higher as they are in an overbought condition. The price may absorb selling pressure or profit-booking till volume supports a positive close. Nevertheless, one needs to be cautious as the scenario may dent the ovarll profit in one's portfolio. The list includes prominent stocks like Adani Gas Limited, Dalmia Bharat Limited, United Spirits Limited, PI Industries Limited, Prism Johnson Limited, SRF Limited, Sundram Fasteners Limited, and Ujjivan Financial Services Limited, among others, which can succumb to profit booking at higher levels.
Here is the list of stocks in Nifty 500 on overbought condition of RSI
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