An Empirical Examination of the Predictive Power of RSI in Indian Large-Cap Stocks (2021â2026)
Abstract
Piyush Prabhat
This study investigates whether the Relative Strength Index (RSI) exhibits short-term predictive power in Indian large- cap stocks. Using daily data from January 2021 to February 2026 for seven highly liquid companies, we construct filtered RSI buy and sell signals and compute 1-day, 3day, and 5-day forward returns. To evaluate predictive ability, pooled linear regression models are employed. The empirical findings indicate that RSI signals do not generate statistically significant abnormal returns across any tested horizon. Furthermore, the regression models demonstrate negligible explanatory power, with R-squared values close to zero. The results support the weak-form Efficient Market Hypothesis in the Indian large-cap segment during the study period.
