Introducing Relative Strength(RS)

Relative Strength (RS) compares a stock’s price performance with a benchmark index (such as the NIFTY 50) to determine whether the stock is out-performing or under-performing the broader market.

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What Relative Strength Actually Measures

Relative Strength compares:

• A stock’s price performance
• Against the market index (like NIFTY 50)

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How to use Relative Strength in Chartink

For example RSI indicator:

• A stock may show weakness on its own(RSI below 20)
• While the market remains relatively strong(RSI above 20)

Example scan: Stocks under-performing NIFTY

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Relative Strength Formula with Example

One practical way to measure Relative Strength is by comparing the RSI (Relative Strength Index) of a stock with the RSI of the benchmark index.

Formula: Relative Strength (RS) = Stock RSI − Index RSI
Example Dashboard: TCS x NIFTY

Using the example data:

• Stock (TCS) RSI: 55.30
• Index (NIFTY) RSI: 48.93
• RS(TCS x NIFTY): +6.37 (The benchmark RSI, not a derived value.)

Since the Relative Strength value is positive, it indicates that TCS is performing better than the NIFTY index at that time.

If Stock RSI > Index RSI → Relative Strength
If Stock RSI < Index RSI → Relative Weakness

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Relative Strength Using 52-Week Price Performance

Relative Strength can also be calculated using 52-week price performance, which is commonly used for medium- to long-term stock selection.

This approach normalises a stock’s price performance against the index over the same period.

Formula (52-Week Performance-Based RS)

Relative Strength (RS) = (Stock Close ÷ Stock Close 52 Weeks Ago) ÷ (Index Close ÷ Index Close 52 Weeks Ago) − 1

Example scan: Stock with RS positive w.r.t NIFTY 50
Chart Snapshot: Relative strength on Chart

How to Interpret 52-Week RS

• RS above 0 → Stock has outperformed the index
• RS below 0 → Stock has underperformed the index

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Relative Strength Using 5-Day Performance Ranking vs NIFTY

This is another method of applying Relative Strength (RS), where stocks are ranked based on their price out-performance versus NIFTY over the last 5 trading days.

Example Dashboard: Top-10 stock Outperform stocks

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Relative Strength comparisons must use the same indicator and timeframe for both the stock and the index.

• Stock RSI vs Index RSI → ✅
• Stock 15 minute MACD vs 15 minute Index MACD → ✅
• Stock Close vs Index Close → ✅
• Stock RSI vs Index MACD → ❌ not logically correct
• Stock RSI (Daily) vs Index RSI (15-min) → ❌ not logically correct

Only the instrument should differ (stock vs index); the measurement method must remain identical.

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