Data visualization is a hot subject today. Today, we have created a pair grid that illustrates the matching of the best performers with the worst performers in the Indian market. The horizontal menu shows the top performers, while the vertical menu shows the worst performers. The pair grid highlights the 60 most relevant pair combinations from all possible pairs made from a cross section of 120 (CNX100 components and Nifty Indices) assets.
Alpha India covers 250 assets giving pairing possibility and monitoring capabilities for 15,625 combinations.
Pair grid is designed not only to monitor the best and the worst but also to anticipate performance cyclicality. What are the various readings from this pair grid?
First, it tells us that the top assets like Federal bank, Bank of Baroda, Cummins, Corporation Bank, Canara Bank, Andhra Bank, LIC Housing, BSE Consumer Durables and Shriram Transport Finance should underperform the worst performers like Punj Lloyd, Suzlon, Housing Development and Infrastructure Limited, Tech Mahindra, Sterlite, GMR Infrastructure, Jaiprakash Industries, Mphasis, Sesa Goa, NTPC. Second, it tells us that we can pair the best against the worst to make a pair strategy. We have ranked the 60 pairs in order of importance. One can trade Federal Bank against Punj Lloyd and Bank of Baroda versus. NTPC.
When these dynamic rankings are plotted as a time series they become the cyclical Rieki. Rieki is an anticipatory system (a cycle) that can warn of impending reversals in performance. It behaves like an oscillator, an extreme level suggesting caution and a potential turn ahead.
The oscillator has reached an extreme level for the fourth time now, suggesting further positivity from current levels. A bottoming Rieki suggests that any dip now should be marginal and INR’s weakening should start soon. The Indian rupee has completed the intermediate corrective structure down.
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Nifty VIX Rieki shows a similar Rieki structure suggesting an outperformance of Nifty VIX against the rest of the 250 group assets. Nifty VIX also has completed the minor corrective structure down which should now take prices higher to 30.
Sectorally the worst performing sectors are BSE Metals, BSE Realty, BSE Power and BSE Oil. Consumer Durables remains the top performer, followed by BSE Auto, BSE Healthcare and BSE FMCG. Now that Auto has diverged sizeable from Oil, the performance looks ready to turn in favor of Oil. In conclusion Nifty has not retraced on an intermediate basis and rising VIX and INR does not make for an encouraging secular setup. As we have mentioned prior Nifty is in a large counter trend primary corrective and pinpointing a top is going to be tricky exercise. Determining the relative performance is less tricky.
| PAIR GRID | ||||||
| Fed. Bank | BOB | Bajaj Auto | Cummins India | Corp. Bank | Canara Bank | |
| Punj Lloyd | 60 | 58 | 54 | 52 | 50 | 48 |
| Suzlon | 58 | 57 | 47 | 46 | 45 | 42 |
| HDIL | 56 | 52 | 41 | 40 | 37 | 35 |
| Tech Mah. | 55 | 50 | 39 | 37 | 33 | 32 |
| Sterlite | 49 | 44 | 30 | 29 | 26 | 24 |
| GMR | 42 | 36 | 23 | 22 | 20 | 19 |
| Jaiprakash | 33 | 28 | 17 | 16 | 15 | 11 |
| Mphasis | 27 | 21 | 10 | 8 | 6 | 5 |
| SESA Goa | 31 | 24 | 14 | 13 | 8 | 7 |
| NTPC | 18 | 11 | 4 | 3 | 2 | 1 |
The authors are with Orpheus Capitals, a global alternative research firm