Sentiment Indicator

200-DMA INDICATOR: This indicator is a measure of the percentage of Nifty 50 stocks that are trading above/below their 200-day moving average. 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. There has been continual improvement in the ratio of stock trading above/below 200-DMA since March 21, 2019. On a w-o-w comparison basis, we observed that about 4% of the stocks entered above the 200-DMA territory and the two stocks which had gone past their 200-DMA were Hindustan Unilever and Grasim Industries. On April 3, 2019, the index has marked all-time high, and during that time, the ratio of stock trading above/below 200-DMA stood at 66:34, where 66 per cent stocks were trading above their 200-DMA and 34 per cent stocks were trading below their 200-DMA. On April 16, 2019, the index surpassed its previous high and marked a fresh record high and this time the ratio was 74:26, where 74 per cent stocks were trading above their 200-DMA and 26 per cent stocks are trading below their 200-DMA, which clearly suggests that, along with the upmove in the benchmark index Nifty, the ratio has improved. The current structure of indicator is suggesting the benchmark index is witnessing participation from majority of the stocks and the index may continue its northward journey as the momentum is titled in favour of bulls.


Sectoral Sentiment Indicator : This indicator basically interprets the number of stocks in the sectoral indices trading above/ below their 200-day moving average. This will help us to know which of the sectors are improving their performance. Among the constituents of Nifty Bank and Nifty Private Bank, all the stocks are trading above their 200-DMA since last four weeks and, on an average, the stocks are trading 15 per cent above from their 200-DMAs. This clearly suggests that the current rally was led by Nifty Bank and Nifty Private Bank and the momentum is high in these sectoral indices. On a w-o-w comparison basis, the sectoral index Nifty Financial services has seen substantial improvement as the stock with an addition of 15 per cent has managed to close above its 200-DMA, followed by Nifty Realty and Nifty FMCG by 10 per cent and 6.67 per cent respectively. On the flip side, the constituents of Nifty Pharma and Nifty PSU Bank have slipped below their 200-DMA by 10 per cent and 8.33 per cent, respectively. The cool-off in Nifty PSU Bank was in line with our expectation as we observed that the index was trading in overbought zone. The Nifty IT and Nifty Metal remained unchanged on w-o-w comparison. We have predicted in the last two reports that we may witness improvement in Nifty Auto index and, accordingly, the index has seen significant improvement as almost 12.5 per cent of the stocks have managed to closed above their 200-DMA in the last two weeks. In the coming weeks, Nifty Pharma may be an attention-seeker because the index is consolidating in a range and there is no significant development, i.e. no addition or drop was seen in the ratio since last four weeks and, presently, it is at even Stevens.


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 5:2 and, in the current week, we have seen marginal improvement to 7:1, where on an average seven stocks touched new 52-week high and one stock hit 52-week low. On April 11 and April 12, the average ratio stood at 3.5:1.5, where on an average basis, 3.5 stocks had touched 52-week high and 1.5 stocks had touched 52-week low. However, in the last two trading sessions, we have seen momentous improvement in the ratio to 10.5:1 where on an average 10.5 stocks had touched new 52-week high and only one stock had touched new 52-week low. This clearly suggests that the internal strength of the market had drastically improved in the last two trading sessions and this has helped the markets to scale higher.




LEGEND:
DMA - Daily Moving Average.
MACD - Moving Average Convergence Divergence
RMI - Relative Momentum Index
ROC - Rate of Change
RSI - Relative Strength Index