Not a Crash, Not a Rally; Just a Warning!

Published on: January 13, 2026

What traders need to accept now is that 45 out of 46 sectoral indices are in negative RSI territory. Let us keep the charts aside because if I post the chart, the reader may analyse as per his knowledge and concludes the view.

According to the most recent RSI levels on the daily Heikin Ashi chart of 46 sectoral indices, 45 sectors have an RSI structure that is lower than their RSI averages. Only one sector, PSU Banks, has a new RSI crossover that is positive. Take a moment to think about that.

This is not a “weakness of choice” phase. This is a broad momentum contraction phase. If traders don’t pay attention to it, they are putting themselves at risk of losing money.

Let us start with the RSI data numbers because traders deal in facts.

Source: RZone

Out of 46 sectorial indexes, 45 sectors are trending with “Negative” on RSI vs. RSI Average. Only one sector (Nifty PSU Bank) is showing a Positive Fresh RSI Crossover.

33 sectors have an RSI below 50.  2 sectors have an RSI below 30.

Only 11 sectors have an RSI above 50, and most of them are still negative compared to their RSI averages.
Even sectors with an RSI above 50 are losing momentum compared to their own trend, which means that the chance of an upside continuation is getting smaller. This changes everything for a trader. This is a change in the market, not a problem with picking stocks.

Traders can rotate when RSI weakness is only in a few sectors.
When 45 out of 46 sectors have a bad RSI, rotation stops.

In such a scenario:

• Momentum strategies lose their edge
• Breakout follow-through fails
• Mean reversion takes over price action
• Time-based corrections take the place of directional trends

If your most recent trades seem like:

• Breakouts that don’t work
• Targets that don’t get hit
• Stops that go off faster than expected

It’s not how you did it. It’s the “market environment.”

Why Traders Should Care About RSI Below 50 in Most Sectors

RSI over 50 means control of bullish momentum. If the RSI is below 50, it means that there is “bearish or corrective control.”

With 33 sectors already stuck below 50, the market is sending traders a clear message that buyers don’t have control over most parts of the market.

Here’s why:

• Pullbacks go deeper than expected
• Bounces fail near resistance
• Rallies look strong during the day but fade at the end of the day

You are trading “against momentum gravity.”

PSU Banks, an opportunity or a trap?

Yes, Nifty PSU Bank is different.

• RSI at about 65
• Average RSI at about 64
• New crossover that is positive
• RSI staying well above 50

But traders need to be objective.
When one sector is strong and 45 others are weak, it usually means:

• Defensive or late-cycle behaviour
• Short-term relative outperformance
• Not leadership that is widespread

Traders shouldn’t suddenly go all-in just because one sector looks strong in this setup. The risk-reward is not equal unless more sectors join the momentum recovery.

Why Picking Stocks Is Risky Right Now

When the RSI breadth falls apart:

• Even strong stocks stop moving in a straight line.
• Relative strength goes down faster.
• Charts get loud and emotional.

This is where traders trade too much in an effort to “make something work.”  But markets don’t pay for hard work. They give rewards for alignment.

In a market where 45 sectors have a negative RSI and most RSIs are below 50, the trader should follow this:

• Make your positions smaller
• Take profits faster
• Trade fewer setups
• Get more cash without feeling bad about it

Cash is not capital that is sitting around. Cash is like “strategic ammunition.”

As a trader, these are the questions in my mind:

How many sectors go back up above RSI 50?

Do RSI averages level off and then rise?

Instead of failed breakouts, do we see failed breakdowns?

Does the number of “Negative” RSI sectors start to go down?

Momentum always fixes itself before the price moves again. Traders who wait for confirmation don’t have to deal with the emotional ups and downs that can ruin P&L during times like this.

The Market Is Testing Trader Discipline

There are 45 out of 46 sectoral indices with a negative RSI structure, which indicates the market is not good for momentum.

If you can get through this phase with discipline, you will have the money and the clarity to take advantage of sectoral momentum when it comes back.

Protect your capital during times of contraction so you can push hard during times of expansion. The market is getting smaller right now.