Heckyl Sentiment Index for Nifty regained strength and moved back into bullish territory, indicating the recent rally in the 50-share index may continue in the near term. The Modi government’s Rs 9-trillion plan to boost economy fueled optimism in the market and has sent the broad based Nifty to a record high level during the past week.
Heckyl has developed a Sentiment Index to track the sentiment around the market based on news development. This index analyses the potential impact of the sentiment on the value of Nifty index. This is done through an analysis of the news flow on the Nifty companies in real-time.
Our back-testing has indicated a strong positive correlation (0.80+), implying that the Heckyl Sentiment Index is an alternative proxy for the 50-share index.
Sentiment Index for Nifty regained strength (Image 1) after the Modi government decided infuse Rs 2.1-trillion as capital in the ailing public sector banks. Moreover, the government’s plan to spend whopping Rs 7-trillion on the road projects also lifted the sentiments.
During the last week, the Nifty moved up 1.70 percent, while the 30-share Sensex surged 2.40 percent.
Heckyl Sentiment index, which reflects a broad reading of collective sentiment for the Nifty companies, has turned mildly bearish for the 50-share index ending 2-month long bullish phase. Media sentiment for the broad-based index was in the bullish territory since the start of earnings season in April this year. The recent rate hike by the US Federal Reserve and selloff in technology shares weighed on the sentiment.