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.