Debuting The Outperformers

JC Parets
February 19, 2021

Big day everyone! We are debuting a new feature for Premium Members of All Star Charts India! There are a lot of exciting things lined up, but it's time to reveal a little something now.

Introducing the new kid on the block- The Outperformers!

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The market as a whole does not move together. Regardless of the market direction, there are always certain stocks and sectors that act as leaders and laggards. As the name suggests, the Leaders are the first to respond to a particular trend, whereas the Laggards join in later.

There is a big advantage in identifying these leaders in any given market environment. These are the names that generate greater returns compared to market indices as well as other stocks.

For example, in a market environment where mid-caps are outperforming the large-caps, it would make sense to be invested in mid-caps rather than large-caps.

Here is the list of The Outperformers that we sorted by way of relative strength. These stocks have been selected on the basis of inter- and intra- sectoral performances. So while these belong to the sectors that are outperforming the market, these stocks are also outperforming their peers within the same sector.

Click on chart to enlarge view.

In order to identify these outperformers, we scanned the NSE F&O list for stocks on the basis of relative strength and sorted them on the basis of the distance between the current market price and their respective all-time highs.

One mistake that investors often tend to make is the error of substitution. Let's take an example. Say the Cement sector is doing well and UltraTech Cement is the strongest stock in the sector. Investors often end up buying stocks that hadn't rallied until then in order to benefit from the ensuing move in the sector.

Two decisions were taken here. While the first decision to remain invested in the Cement sector is right, the second decision to remain invested in a stock that's not outperforming the sector is the error. Yes, the other stocks might rally as the sector continues to outperform the market, but the greater benefit lies in remaining invested in strong stocks within a strong sector.

In a bottom-up approach, we look for outperforming stocks in the outperforming sectors!

Let's take a look at some of these ideas.

The first name on the above list is Hindalco.

Hindalco has had three weeks of an extremely strong move, as Metals caught on to the trend and started rallying post a brief pause. The stock is making new all-time highs and is acting as a sectoral leader compared to its peers which are yet to breach their resistances. With the breakout above 284, the stock looks poised for a strong rally towards 407 as the indicator moves into overbought territory.

We are bullish above the risk management level of 284, with a target near 407.

Now let's take a look at a stock that is not making all-time highs, but 52-week highs. Here we have Tata Motors. The stock has had a phenomenal recovery from March 2020 lows and continues to break through its overhead supply zones. Breaking out of a three-year base, the indicator moved from a bearish regime to a bullish regime, signaling just how strong this move is.

As this inherent strength continues to play out, we are bullish above levels of 273, with a target near 402. Corrections towards 273 can be used as buying opportunities.

This bottom-up scan helps us identify the stocks that are on the move! So while we continue with our top-down analysis for a broader market perspective, an additional layer of the bottom-up scan adds to our process making sure that we're not missing the names that are experiencing the strongest moves.

Thanks for reading and please let us know if you have any questions.

Allstarcharts Team

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