Home › Blogs › Learning blogs › Beating the market is not enough

Beating the market is not enough: why every Nifty index and stock should also beat cash

Almost every relative strength chart compares a sector or a stock with the market. In a falling market that can mislead badly: an index that falls 4% while the market falls 6% looks strong, yet money parked in a liquid fund earned a small positive return over the same months. Our index rotation tracker now measures every index, and every stock inside it, against cash as well. This article explains the idea, the simple formula behind it, and how to use the two layers of the tool.

Published 31 Oct 2026, with data to the close of 30 Oct 2026. Updated 1 Nov 2026 with the market switch and stock access. Written by Vishal Trehan.

NSE is the National Stock Exchange of India. ETF is an exchange-traded fund. IT is information technology. SEBI is the Securities and Exchange Board of India.

Open the live index rotation tracker

The blind spot in relative strength

Relative strength divides an index by a benchmark. If Nifty Bank falls 4% while Nifty 500 falls 6%, Bank’s relative strength rises, and a relative rotation chart will happily show Bank as strong or improving. That is true in a narrow sense: Bank did better than the market.

But nobody has to own the market. The real alternative to buying a sector is not only an index fund on Nifty 500; it is also cash. A liquid ETF that tracks the Nifty 1D Rate Index (overnight lending rates) rises a little almost every day. Over the three months to 30 October 2026 it returned about +1.3%, with almost no risk. Against that, a sector that lost 4% did not “outperform”. It cost money.

Most published rotation work ignores this, because it was written for fund managers who must stay invested and are judged against an index. An individual investor is not bound by that rule, and for them the cash comparison matters as much as the market comparison.

The idea: two hurdles, and the higher one counts

Every index now faces two hurdles over the same period: the market (Nifty 500) and cash (the liquid ETF benchmark). An index is only worth attention if it beats both.

Beating both is the same as beating whichever of the two did better. So the tracker uses one number, the edge:

Edge = index return − the higher of (market return, cash return)

A positive edge means the index beat both the market and cash. When the market is beating cash, the hurdle is the market and the tool behaves like a normal relative strength tool. When cash is beating the market, the bar rises, and indices that were only “falling less than the market” drop out of the Leaders.

Why one number and not two charts

It is tempting to draw a chart with “return against the market” on one axis and “return against cash” on the other. It does not work, and the reason is useful. An index’s return over cash is its return over the market plus the market’s return over cash:

(index − cash) = (index − market) + (market − cash)

The second part is the same for every index. Plot all indices that way and they fall on a single straight line. In other words, at any moment only one of the two hurdles actually decides the result, and it is whichever of market and cash has done better. Measuring the edge over the higher hurdle captures both comparisons without losing anything.

What it showed on 30 October 2026

Over the three months to 30 October 2026, Nifty 500 returned about −6.2%, while the liquid ETF benchmark returned about +1.3%. Cash was the higher hurdle.

Twelve indices, including Bank, Nifty Smallcap 250, Nifty200 Momentum 30 and India Defence, looked strong on a market-only chart because they fell less than Nifty 500. All of them still returned less than a liquid ETF. On the tracker they now show as below the hurdle, and the page says so in plain words.

These figures describe the past three months. They change every day, and the live page always shows the latest reading.

The four groups, now measured against the hurdle

The tracker keeps the familiar four groups, but they are now built from the edge and from how the edge has changed over the last four weeks.

One practical result: a Leader on this page has, by definition, earned more than cash over the chosen period. On a market-only rotation chart a Leader can be an index that is falling.

The same test for the whole market: stocks or a liquid ETF?

The two-hurdle idea also works one level up, for the market as a whole. The tracker now has a panel called “Stocks or liquid ETF right now?”. It compares the 3-month return of Nifty 500 and of Nifty Smallcap 250 with the liquid ETF benchmark.

• If either index is ahead of cash, the panel says stocks are ahead and it is reasonable to stay invested.
• If both have returned less than cash, the panel says cash is the better position: holding liquid ETF units, which earn the overnight rate every day, has done better than holding stocks.

On 30 October 2026 both indices were behind cash (Nifty 500 about −6.2% and Smallcap 250 about −6.1%, against about +1.3% for the liquid ETF benchmark), so the panel read “hold liquid ETF units”. A week-by-week strip shows how often each reading has held over the last two years. Like everything on the page, it describes past returns and is not a signal to buy or sell.

Layer two: the stocks inside an index

Once you know which index deserves attention, the next question is which of its stocks. The tracker now has a second layer for this. Pick any of the 35 indices and it shows every member stock, judged in the same way, with one more hurdle added:

Stock edge = stock return − the highest of (its index, the market, cash)

The logic is the same. A single stock carries more risk than an index, so it is only worth owning if it has done better than all the easy alternatives: an index fund on its own sector or theme, an index fund on the whole market, and a liquid ETF. A stock that beats Nifty 500 but trails its own sector index has simply ridden the sector, and the sector index would have done the job with less risk.

For each index the stock layer shows how many members beat all three hurdles, a stock rotation timeline with the same four colours as the index timeline, and a sortable table with each stock’s return against every hurdle, its distance from its 52-week high and its position against its 200-day average. On 30 October 2026, for example, Nifty IT had beaten both the market and cash over three months, so the IT index itself was the highest hurdle for its stocks, and 6 of its 10 members cleared it. In Nifty Midcap 150, where cash was the highest hurdle, 28 of 150 stocks cleared it.

The stock layer covers about 750 stocks: every member of Nifty 500 and Nifty Microcap 250, using the latest index member lists published by NSE Indices and daily closing prices updated each trading evening.

Who sees what. Visitors see each index’s stock counts and numbers with the stock names hidden. A free account (email, mobile number and password) shows every stock by name in one index each day, chosen from the top of the rotation table. Index Rotation Pro unlocks the stocks inside all 35 indices and adds a weekly rotation digest by email every Saturday.

How to use the two layers together

1. Check the higher hurdle. The top of the page says whether the market or cash is the hurdle right now. When cash is the hurdle, expect very few Leaders; that is information, not a fault.
2. Find the indices that clear it. The hurdle ladder, rotation map and timeline show which indices beat both the market and cash, and which are improving towards it.
3. Look for consistency. The table shows, for 1 month, 3 months, 6 months and 1 year, whether each index beat both hurdles. An index that clears them on three or four periods is showing steadier strength than one that clears them only on the shortest.
4. Open its stocks. Pick the index in Index detail and scroll to the stocks section to see which members beat their index, the market and cash. Stock names need a free account (one index a day) or Index Rotation Pro (all indices).
5. Read the plain-English notes. Every chart has a short written explanation of what the current reading means.

What this method does not tell you

• It looks backwards. Every number is a past return. Strength can fade quickly, and the tool cannot say what happens next.
• Small edges are not worth much. Switching between equity and cash costs brokerage and taxes. An edge of a fraction of a percentage point is within noise.
• The liquid benchmark is close, not exact. Liquid ETFs track the Nifty 1D Rate Index before their costs; liquid mutual funds usually earn a little more.
• Member lists change. NSE Indices reviews its indices twice a year. The stock layer uses the latest lists, so a stock that joined recently is shown for the whole period.
• Prices only. Returns are price returns of indices and stocks. Dividends are not included.

Common questions

Is the tracker free?
The index tracker is free, needs no login or app and updates after every trading day. Stock names inside an index need a free account, which shows one index a day; Index Rotation Pro shows all 35 indices and adds the weekly digest.

Has this idea been used before?
Comparing equities with a cash return is known in research as absolute or “dual” momentum, and is usually applied to the market as a whole. The tracker applies the cash test to every index and every stock, alongside the market test.

Which return period should I use?
Three months is the default. It is long enough for cash to earn a visible return and short enough to catch rotations. One month is close to plain relative strength because cash earns very little in a month.

Is this investment advice?
No. The tracker and this article are for education. They do not recommend buying, selling or switching any security, fund or asset class.

See today’s reading for indices and stocks

Also see the Nifty 200 and Nifty 500 market breadth tracker, which shows every 10 minutes how many stocks are taking part in the day’s move.

Share: WhatsApp · Telegram · X · LinkedIn · Facebook