Sentiment Indiactor

200-DMA INDICATOR: This indicator is a measure of the percentage of Nifty 50 stocks that are trading above/below their 200-day moving averages. The 200-DMA is considered important and one of the basic technical indicators that can be used to determine long-term trend of a security. Among the constituents of Nifty index, 56 per cent stocks are trading above their 200-DMAs and 44 per cent stocks are trading below 200-DMAs. In the last five trading sessions, GAIL, Grasim Industries, Hindustan Unilever and Tata Motors has closed below their 200-DMAs, while on the flip side, a lone stock i.e. Power Grid has managed to close above the 200-DMA. On a w-o-w comparison basis, we observed that about 6% of the stocks have closed below their 200-DMA. A consistent deterioration has been witnessed in the ratio of stocks hitting 52-week lows since the third week of April, with only one exception on April 26. This clearly suggests that the downward move was not only quantitative in nature but also qualitative, as almost 18 per cent stocks has managed to close below 200-DMA since April 16, 2019.



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. The current week was undoubtedly dominated by the bears and it is clearly reflected in the sectoral sentiment indicator, with bulk of the components of the sectors having managed to close below their 200-DMAs. To begin with, on a w-o-w comparison basis, as many as 26.67 per cent of the stock components of the Nifty FMCG have managed to close below their 200-DMAs, followed by Nifty PSU Bank where 16.67 per cent and about 13.34 per cent in the Nifty Metal has witnessed components slipping below the crucial 200-DMA. Among Nifty Pharma and Nifty Realty, about 10 per cent of the stock constituents had moved below 200-DMA. Most notably, in the past two weeks, almost a third of the constituents of Nifty PSU Bank have managed to close below their 200-DMAs and the index itself has managed to close below its 200-DMA after two months. The Nifty FMCG index has also managed to close below its 200-DMA after one month. The Nifty Metal is consistently witnessing new addition in stocks, which are trading below their 200-DMAs since last three weeks. On a cumulative basis, almost 33.34 per cent constituents have managed to close below their 200-DMAs in the last three weeks. The Nifty Auto and Nifty Financial Services saw a marginal dip by 6.25 per cent and 5 per cent, respectively. The Nifty Bank, Nifty IT, Nifty Media and Nifty Private Bank indices remained unchanged on a w-o-w comparison. On a w-on-w comparison basis, not a single sectoral index has addition of stock trading above its 200-DMA, which clearly suggests that we are witnessing broad-based selloff in the recent correction.



Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, the increasing numbers of stocks reaching new 52-week highs and fewer stocks reaching new 52-week lows is representative of a bull market, and vice-versa being true of a bear market. On a w-on-w comparison basis, the previous week's ratio was 11:6 and, in the current week, we have seen the average ratio is inclined in favour of stocks declining to 52-week lows to 7:8, where on an average, seven stocks touched new 52-week highs and eight stocks hit 52-week lows. Since February 2019, for the first time, the ratio has been sloping towards the bears. In the last two trading sessions, we have seen a significant improvement in the number of stocks making 52-week lows, while not a single stock has managed to touch its 52-week high. This clearly suggests that the internal strength of the market had drastically weakened in the last two trading sessions and this clearly indicates that the bears have dominated over the last couple of trading sessions. These ongoing structural changes clearly suggest that the bears are getting the upper hand over bulls ahead of the major event outcome.



*LEGEND: DMA - Daily Moving Average. 
 MACD - Moving Average Convergence Divergence
RMI - Relative Momentum Index
ROC - Rate of Change 
RSI - Relative Strength Index
(Closing price as of May 08, 2019)