Sentiment Indicators

200-DMA INDICATOR: This indicator measures the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving averages. The 200-DMA is considered important as it is one of the basic technical indicators that can be used to determine the longterm trend of a security. Almost 54 per cent of the stocks that constitute Nifty 50, the equity benchmark index, are trading above their 200-DMAs, while 46 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that six per cent of the stocks have managed to close below their 200-DMAs. In the last five trading sessions, Axis Bank, Eicher Motors, Hindalco and TCS has managed to close below its 200-DMA while on the flip side, M&M has managed to close above its 200-DMA.

On the Budget day, Nifty index has witnessed one of the its biggest single day fall in the terms of percentage since October 05, 2018 as index has lost almost 300.25 points or 2.51 per cent. This is clearly visible in this indicator as the ratio of stocks that are trading above/below their 200-DMA was turned into the favour of bears for the first time after December 13, 2019. However, the index has recovered entire losses, which were registered on the Budget Day in the last three trading sessions and in this process, almost 12 per cent stocks of Nifty has managed to close above its 200-DMA. With this, the ratio of stocks that are trading above/below their 200-DMA is again turned into the favour of bulls. Going ahead, it would be interesting to watch the behavior of index in the coming weeks as the current structure of indicator remains more or less similar to the last 21 trading sessions, as the ratio of stocks trading above/below its 200-DMA is still in defined range.

Sectoral Sentiment Indicator : This indicator basically interprets the number of stocks in the sectoral indices trading above/below their 200-day moving averages. This will help us to know which of the sectors are improving their performance. On a WoW comparison basis, the sectoral index-Nifty Private Bank has seen a substantial decline as 30 per cent of the stocks have managed to close below their 200-DMAs, followed by Nifty Bank by 25 per cent. Among Nifty Auto, Nifty FMCG and Nifty Metal, about 6.67 per cent each of the stock constituents had moved below their 200-DMA. On the flip side, among the constituents of Nifty Realty, almost 10 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty Media, where 6.67 per cent component moved above the crucial 200-DMA. Nifty Financial Services, Nifty IT, Nifty Pharma and Nifty PSU Bank indices remained unchanged on a WoW comparison.

Among the constituents of Nifty Bank index, almost 75 per cent of the stocks are trading below its 200-DMA and on Budget day, the index itself closed below its 200-DMA for the first time after October 17, 2019. However, on Tuesday, Nifty Bank index has managed to reclaim its 200-DMA on closing basis. Nifty PSU Bank is truly in pain as the entire set of the stocks are trading below their 200-DMA since the last three weeks. Among the constituents of Nifty PSU Bank index, last week, the stocks were trading below their 200-DMAs by an average of about 20.70 per cent and in the current week, on an average, the stocks fell further by 4.45 per cent.

Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among Nifty 500 stocks, a higher number of stocks reaching 52-week highs and lesser stocks hitting 52-week lows represent a bull market. The opposite suggests a bear market. On a WoW comparison, the previous week's average ratio was 37:4 and, in the current week, the average ratio is 23:18, where, on an average, 23 stocks touched new 52-week highs while, 18 stocks hit new 52-week lows. On the Budget day, Nifty 500 index has witnessed a fierce sell-off as the index lost almost 255.05 points or 2.58 per cent. This is clearly visible in this indicator as the ratio of stocks making new 52-week high/low was turned into the favour of bears for the first time after December 13, 2019. With this, on Monday, we witnessed a highest number of stocks making new 52-week low since October 15, 2019.

However, from the low of February 03, 2020 the index has gained almost 391.50 points or 4.05 per cent and along with this upward move, the ratio of stocks making new 52-week high/low was again turned into the favour of bulls. On February 01 and February 03, the average ratio was 16:29 but in the last two trading sessions, we saw a significant improvement in the ratio to 31:14, where an average of 31 stocks had touched new 52-week high and 14 stocks touched new 52-week low. This clearly suggests that the internal strength of the market has improved in the last two trading sessions. Going ahead, the current week’s average ratio of stocks making new 52-week high/ low stood at 23:18, which suggests that the index is likely to witness consolidation amid individual stocks, whereas, quality stock picking and junk stocks dumping is underway.