Sentiment Indicator

200-DMA INDICATOR: This indicator measures the percentage of the Nifty 50 stocks that are trading above/below their 200-day simple moving averages. The 200-DMA is considered as an important and one of the basic technical indicators that can be used to determine the long-term trend of security. The index has retested the 12,000 mark last week but it was unable to sustain above 12,000 levels, which indicates that the breakout on the upside has lacked the enthusiasm from market participants. This is reflected well on the 200-DMA indicator as, for the first time since October 17, 2019, the ratio has turned in the favor of the bears. Almost 54 per cent stocks, constituting the Nifty 50 - the bellwether equity benchmark, are trading below their 200-DMAs while 46 per cent stocks are trading above their 200-DMAs. On a w-o-w comparison basis, we observed that about 14% of the stocks have closed below their 200-DMAs. In the last five trading sessions, Adani Ports, Axis Bank, HEROMOTOCO, Hindalco, LT, Sun Pharma, and UPL have closed below their 200-DMAs. The Nifty index had fallen almost 193.70 points or 1.60 per cent from the high of November 08, 2019, and since then, almost 14 per cent constituents of the index have managed to close below its 200-DMA. With this, the current ratio of stocks, trading above/below its 200-DMA, stands at 54:46, which is the lowest since October 16, 2019. This current structure of indicator is suggesting that the benchmark index is likely to witness a consolidation with some negative biases in upcoming days and further deterioration in the ratio would increase the risk of a more meaningful correction.

 

Sectoral Sentiment Indicator : This indicator talks about the number of stocks in the sectoral indices that are trading above/below their 200-day moving averages. It helps us in identifying the sectors, which are improving their performance. The Indian market has witnessed a sell-off from higher levels and touched two weeks low as weak economic data and concerns over a slowdown in earnings growth have put investors on their back foot. This is visible in sectoral sentiment indicator as almost eight sectoral indices have witnessed an addition in stocks that have managed to close below their 200-DMAs. On a w-o-w comparison basis, the sectoral indices, including Nifty Pharma, Nifty Private Bank, and Nifty Realty, have seen a substantial 10 per cent decline as stocks in each index has managed to close below their 200-DMAs, followed by Nifty Bank with 8.33 per cent decline. The Nifty FMCG, Nifty Media, and Nifty Metal have also experienced a fall of 6.67 per cent as stocks of each index slipped below the crucial 200-DMA. The Nifty Financial Services index has seen a minor dip in the stocks, as the stocks trading above their 200-DMAs dropped down to 70 per cent from 75 per cent last week. On a w-o-w comparison basis, not a single sectoral index has seen an addition of stock trading above its 200-DMA. The Nifty Auto, Nifty IT, and Nifty PSU bank indices remained unchanged on a w-o-w comparison. The Nifty IT index has been consolidating in a range and there was no significant development, that is, no addition or significant drop was seen in the ratio for the last two weeks but an average dip of 4.83 per cent has been witnessed during the same period. Since the last Wednesday, the Nifty PSU Bank index has lost almost 136.60 points or 5.41 per cent. Among its constituents, almost 91.66 per cent stocks are trading below their 200-DMA and the index itself is trading below its 200-DMA by 16.15 per cent. The index has remained unchanged on a w-o-w basis. The stocks were trading below their 200-DMAs by about an average of 20.31 per cent in the last week but we have seen further correction in stocks by 4.18 per cent on average in the current week.

Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, an increase in the number of stocks, reaching new 52-week highs, and a decrease in stocks, reaching new 52-week lows, is a representative of a bull market, and vice-versa is true about a bear market. On a w-o-w comparison basis, the previous week's ratio was 21:5 and the ratio is 17:8 in the current week, where, on average, 17 stocks touched new 52-week highs while eight stocks hit new 52-week lows. One interesting fact that comes in the notice is that the average number of stocks making 52-week high in the current week was lowest since October 23, 2019. However, this indicator suggests the week has been a lacklustre one and not much action has been seen. Though the ratio has reduced significantly, the stance remains bullish as the number of stocks, hitting 52-week highs, is greater than the number of stocks, hitting 52-week lows.