Market trend or market sentiment can be analyzed with technical as well as fundamental analysis. But when it comes to derivative market, it is always advisable to follow fundamental analysis i.e. option chain data. Because, option data or OI is considered as leading indicator. AND in derivative data put call ratio or PCR is one of the prime fundamental indicator to find market trend or trend of any particular stock. So, put call ration is very important to analyze in order to find market trends. PCR is very much akin to relative strength index (RSI) in technical analysis. If PCR is above 1, it is considered as bullish sentiment and if PCR is less than 1, it is bearish sentiment. And if PCR is above 1.7, market is overbought and on the other hand put call ratio below 0.5 is thought to be oversold. These values vary to index to index (nifty & banknifty) and also stock to stock. Watch the full video for complete understanding.
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