Weaving a Bullish Path on Definedge Textile Index

By Brijesh Bhatia (@bbrijesh9)

Pune, 14th December 2024: The last week witnessed significant volatility in the Indian stock market, with both bulls and bears battling for control. Despite this, the Nifty50 managed to end the week on a positive note, up by 0.37% at 24,768. The day’s fluctuations reflected broader market trends, particularly the contrasting performances of the Midcap and Smallcap indices. The Nifty Midcap100 posted a modest gain of 0.49%, while the Nifty SMLCAP100 ended the week 0.44% lower, illustrating the mixed sentiment in the market. Amidst this divergence, the Textile Index was one sector stood out. This index broke through a multi-year consolidation phase to reach new highs.

At Definedge, we rely on the Equal Weighted Index (EQW) to offer a more nuanced view of sector performance. Unlike traditional market-cap weighted indices, which are dominated by larger stocks, the EQW assigns equal weight to all constituent stocks, regardless of their market capitalisation. This approach provides a more balanced perspective, allowing for a clearer understanding of the sector as a whole, without the influence of any single large stock skewing the results.

Definedge has developed the EQW Textile Index to further refine sector analysis. This sector-specific index tracks 52 textile-related stocks and is one of the few available for monitoring the textile industry, which often experiences cyclical trends influenced by both domestic and global demand. 

Definedge EQW Textile Index: Surging to New Heights

Source: Zone Web, Definedge Securities

Recently, the Definedge EQW Textile Index has attracted attention by breaking out of a two-year consolidation phase, reaching an all-time high. This breakout suggests a bullish trend for the textile sector, pointing to growing momentum. Such a shift often indicates a change in investor sentiment, with technical chart patterns supporting the likelihood of continued upward movement.

Since the EQW index is equal-weighted, individual stock performance plays a crucial role in its movement. For the index to continue climbing, more stocks within the sector must show positive momentum. Ideally, these stocks should demonstrate bullish trends across multiple timeframes and technical indicators. To assist with this, Definedge offers an advanced tool called the All Chart Matrix Scanner, which identifies stocks with the highest potential for sustained growth. 

All Chart Matrix: A Tool for Stock Identification

The All Chart Matrix is a key tool developed by Definedge to help traders make informed decisions. It evaluates stocks based on their technical patterns, aggregating data from various charts and timeframes. Each stock is assigned a score of 1 for bullish signals and 0 for bearish signals. This scoring system enables traders to quickly assess a stock’s potential by examining its performance across different timeframes and chart types.

Stocks with higher scores indicate stronger bullish momentum, which increases their likelihood of contributing to the growth of the Definedge Textile Index.

Top 10 Textile Stocks from the Definedge All Chart Matrix

Based on the All Chart Matrix, the following 10 textile stocks have shown the most promise, scoring highly across multiple timeframes and chart types:

1. CANTABIL
2. GOKEX
3. HIMATSEIDE
4. KITEX
5. KPRMILL
6. MHLXMIRU
7. PAGEIND
8. PDSL
9. RUBYMILLS

• SWANENERGY

These stocks have emerged as the strongest performers, with bullish signals indicating their potential to drive further growth in the textile sector. Readers looking for leaders in this space should closely monitor these names as they are potentially well-positioned to play a key role in the sector’s future success.

Disclaimer: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. This article is strictly for educative purposes only. As per SEBI guidelines, the writer and his dependents may or may not hold the stocks/commodities/cryptos/any other assets discussed here. However, clients of Definedge may or may not own these securities.

 About the author:

Brijesh Bhatia has over 18 years of experience as a trader and technical analyst in India’s financial markets. He is a well-known face in the business channel as a Market Expert and has worked with broking giants like UTI, Asit C Mehta, and Edelweiss Securities. He is currently a Senior Research Analyst and Editor at Definedge.