A Deep Reinforcement Learning Framework for Strategic Indian NIFTY 50 Index Trading

This paper presents a comprehensive deep reinforcement learning (DRL) framework for developing strategic trading models tailored to the Indian NIFTY 50 index, leveraging the temporal and nonlinear nature of financial markets. Three advanced DRL architectures deep Q-network (DQN), double deep Q-network (DDQN), and dueling double deep Q-network (Dueling DDQN) were implemented and empirically evaluated. Using a decade-long dataset of 15-min interval OHLC data enriched with technical indicators such as the exponential moving average (EMA), pivot points, and multiple supertrend configurations, the models were trained using prioritized experience replay, epsilon-greedy exploration strategies, and softmax sampling mechanisms. A test set comprising one year of unseen data (May 2024–April 2025) was used to assess generalization performance across key financial metrics, including Sharpe ratio, profit factor, win rate, and trade frequency. Each architecture was analyzed in three progressively sophisticated variants incorporating enhancements in reward shaping, exploration–exploitation balancing, and penalty-based trade constraints. DDQN V3 achieved a Sharpe ratio of 0.7394, a 73.33% win rate, and a 16.58 profit factor across 15 trades, indicating strong volatility-adjusted suitability for real-world deployment. In contrast, the Dueling DDQN V3 achieved a high Sharpe ratio of 1.2278 and a 100% win rate but with only three trades, indicating an excessive conservatism. The DQN V1 model served as a strong baseline, outperforming passive strategies but exhibiting limitations due to Q-value overestimation. The novelty of this work lies in its systematic exploration of DRL variants integrated with enhanced exploration mechanisms and reward–penalty structures, rigorously applied to high-frequency trading on the NIFTY 50 index within an emerging market context. Our findings underscore the critical importance of architectural refinements, dynamic exploration strategies, and trade regularization in stabilizing learning and enhancing profitability in DRL-based intelligent trading systems.

Authors

Institutions

Publication Details

Journal
AI
Published
2025-08-11
DOI
https://doi.org/10.3390/ai6080183
Primary Topic
Stock Market Forecasting Methods
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

A Deep Reinforcement Learning Framework for Strategic Indian NIFTY 50 Index Trading

Sangeeta Pant, Raj Gaurav Mishra, Anuj Kumar, Dharmendra Sharma et al.
AI
Stock Market Forecasting Methods
article

A Deep Reinforcement Learning Framework for Strategic Indian NIFTY 50 Index Trading

Sangeeta Pant, Raj Gaurav Mishra, Anuj Kumar, Dharmendra Sharma, Mahipal Yasuman Gadhavi
article en

Abstract

This paper presents a comprehensive deep reinforcement learning (DRL) framework for developing strategic trading models tailored to the Indian NIFTY 50 index, leveraging the temporal and nonlinear nature of financial markets. Three advanced DRL architectures deep Q-network (DQN), double deep Q-network (DDQN), and dueling double deep Q-network (Dueling DDQN) were implemented and empirically evaluated. Using a decade-long dataset of 15-min interval OHLC data enriched with technical indicators such as the exponential moving average (EMA), pivot points, and multiple supertrend configurations, the models were trained using prioritized experience replay, epsilon-greedy exploration strategies, and softmax sampling mechanisms. A test set comprising one year of unseen data (May 2024–April 2025) was used to assess generalization performance across key financial metrics, including Sharpe ratio, profit factor, win rate, and trade frequency. Each architecture was analyzed in three progressively sophisticated variants incorporating enhancements in reward shaping, exploration–exploitation balancing, and penalty-based trade constraints. DDQN V3 achieved a Sharpe ratio of 0.7394, a 73.33% win rate, and a 16.58 profit factor across 15 trades, indicating strong volatility-adjusted suitability for real-world deployment. In contrast, the Dueling DDQN V3 achieved a high Sharpe ratio of 1.2278 and a 100% win rate but with only three trades, indicating an excessive conservatism. The DQN V1 model served as a strong baseline, outperforming passive strategies but exhibiting limitations due to Q-value overestimation. The novelty of this work lies in its systematic exploration of DRL variants integrated with enhanced exploration mechanisms and reward–penalty structures, rigorously applied to high-frequency trading on the NIFTY 50 index within an emerging market context. Our findings underscore the critical importance of architectural refinements, dynamic exploration strategies, and trade regularization in stabilizing learning and enhancing profitability in DRL-based intelligent trading systems.

AIVol. 6(8)
Narsee Monjee Institute of Management Studies (IN), Symbiosis International University (IN), D Y Patil International University (IN)
Partnerships for the goals
Openalex Percentile: Top 75%
Stock Market Forecasting Methods
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.