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. The continuous improvement in the ratio started from March 21, 2019 has been halted in the last four trading sessions. Among the constituents of Nifty index, 68 per cent stocks are trading above their 200-day DMA and 32 per cent stocks are trading below 200- day DMA. In the last four trading sessions, BPCL, Bharti Airtel, Tata Steel and Yes Bank have closed below their 200-DMA, while on flip side, Coal India 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. On April 23, 2019, almost 10% stocks closed below 200-DMA. However, on April 24, we saw a minor improvement in the ratio as 4% stocks managed to close above their 200-DMA. These ongoing structural changes clearly suggest that the index is witnessing consolidation as picking and dumping of individual stocks is underway.



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 Indian market has witnessed correction in major part of the week and this correction was backed by broad-based selling in more than 50 per cent sectors. On a w-o-w comparison basis, the sectoral index Nifty Realty has seen substantial decline as 20 per cent stocks have managed to close below their 200-DMA, followed by Nifty Metal by 13.34 per cent and Nifty Financial Services and Nifty Private Bank by 10 per cent each. The Nifty Bank and Nifty Auto saw a marginal dip by 8.34 per cent and 6.25 per cent, respectively. The cool-off in Nifty Bank and Nifty Private Bank was in line with our expectation as we observed that the index was trading in the overbought zone. The Nifty FMCG, Nifty IT, Nifty Media and Nifty PSU Bank indices remained unchanged on a w-o-w comparison. On a w-on-w comparison basis, only Nifty Pharma index has seen marginal improvement as 10 per cent stocks have managed to close above their 200-DMA. The Nifty IT index index has been consolidating in a range and there was no significant development, i.e. no addition or drop was seen in the ratio since last five weeks. However, in the coming weeks, Nifty IT may be an attention-seeker as the recent price action suggests further momentum in the index because of rise in USD/INR.



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 7:1, but in the current week due to correction in the market, the ratio has changed to 6:4, where on an average, six stocks touched new 52-week highs and four stock hit 52-week lows. On April 22 and 23, we have seen the ratio has turned negative for the first time since February 27, 2019. However, in the last two trading sessions, we have seen momentous improvement in the ratio to 10:3, where on an average, 10 stocks touched new 52-week highs and three stocks had touched new 52-week lows. This clearly suggests that the internal strength of market had weakened on a w-on-w comparison basis and it had turned bearish for two days, but on Wednesday, the bulls made a comeback.



*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 Apr 24, 2019)