Manish i have subscribed to a 3rd Party Research Of American Markets where the Analyst performs Analysis based on 4 ETFs i.e. All 4 moving in synchronized direction symbolizes the strength of the Underlying Trend.
1) S&P 500 SPDRS (ARCA:SPY)
2) Dow Jones Industrial Average SPDR (ARCA:DIA)
3) PowerShares QQQ ETF (Nasdaq:QQQ)
4) Russell 2000 iShares Index (ARCA:IWM)
So i was wondering that in today's dynamic times relying on 2 Indices alone might not be enough. Since these above mentioned 4 ETFs represent each and every sector so i was wondering in those terms , what all ETFs/Indices in India we can consider for Analysis purposes with a view on Broader Economy & not Stock Market Alone.
Nikhil.... in all this discussion we are missing the basic point. In order to make his theory comprehensive Charles Dow needed a technical indicator which could tell him [b]"the time period when markets are rolling over". And he achieved this by developing 2 indexes and divergence between them.... simple.
Why he choose only two indexes is debatable. Maybe these two sectors were the most dominant one, maybe the economy was not dynamic as today, maybe he lacked sophisticated resources to research further, maybe he wanted to keep things simple or maybe he was just too lazy.
A part of what Charles Dow did in early part of 1900's is being repeated again in 1980's and 2000's by person named John Murphy and he named it "Intermarket Analysis". In this he studied correlations between different asset classes, how they move in different part of economic cycle, how different sectors perform in diff. phases of economic cycles and how divergence between them can warn us of dangers ahead.
Weather you follow 2 indexes, 4 asset classes, 7/8 different sectors or 100 different ETF's. The objective of each study is the same, to warn you before time of dangers ahead and how money should be allocated to derive biggest bang for buck.
Gunjan... banking is a part of services industry.
I sometimes wonder are markets really that complex or we have created our own beast out of it.