Rate of Change (ROC) is a momentum oscillator that measures the percentage change in a security's price over a specified number of periods — directly quantifying the speed and direction of price movement. It is calculated as: ROC = [(Current Close – Close n Periods Ago) ÷ Close n Periods Ago] × 100. When ROC is positive and rising, it indicates accelerating upward momentum. When positive but falling, momentum is decelerating. A ROC below zero signals negative momentum — the price is lower than it was n periods ago. ROC crossing from negative to positive territory is a bullish signal, while crossing from positive to negative is bearish. The ROC is one of the purest momentum indicators because it directly measures the rate of price change without smoothing or normalization — making divergences between ROC and price particularly significant. In Indian equity markets, ROC is used to identify momentum acceleration in trending stocks, detect divergences that precede trend reversals, and rank stocks by momentum strength for quantitative factor-based stock screening — a core component of momentum investing strategies applied to the Nifty 500 and broader BSE-listed universe.
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