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 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, 58 per cent stocks are trading above their 200-DMAs and 42 per cent stocks are trading below 200-DMAs.In the last five trading sessions, Adani Ports, Asian Paints, Hindustan Unilever, IOC, L&T and NTPC have closed above their 200-DMAs.On a w-o-w comparison basis, we observed that about 12% of the stocks have managed to close above their 200-DMAs. On Monday, the cloud of uncertainty cleared as the exit polls hinted at a clear majority for the incumbent NDA government and this is clearly visible in the indicator as almost 6% stocks have managed to close above their 200-DMAs. On April 18, 2019, the index has marked all-time high, and during that time, the ratio of stock trading above/below their 200-DMAs stood at 70:30, where 70 per cent stocks were trading above their 200-DMAs and 30 per cent stocks were trading below their 200- DMAs. On May 21, 2019, the index surpassed its previous high and marked a fresh record high, and this time, the ratio was 56:44, where 56 per cent stocks were trading above their 200-DMAs and 44 per cent stocks were trading below their 200-DMAs, which clearly suggests that the current rally is not backed by broad-based participation and it is led by heavyweight counters. However, for the any further upside, the ratio needs to improve.



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. Exit poll predictions powered the Indian market to close at an all-time high and it is clearly reflected in the sectoral sentiment indicator, with bulk of the components of the sectors having managed to close above their 200-DMAs.To begin with, on a w-o-w comparison basis, as many as 30 per cent of the stock components of the Nifty Realty have managed to close above their 200-DMAs, followed by 20 per centof the Nifty FMCG and about 15 per cent of the Nifty Financial Services has witnessed components surging above the crucial 200-DMAs. The components of Nifty Bank and Nifty PSU Bank surged by 8.34 per cent each and the Nifty Media and Nifty Metal by 6.67 per cent each above their 200-DMAs. The pull-back in Nifty Media and Nifty Metal was in line with our expectation as we observed that the index was trading in the oversold zone. Nifty Auto, Nifty IT, Nifty Pharma and Nifty private Bank remained unchanged on a w-o-w comparison basis. At the moment, in the Nifty Realty space, the ratio of stocks trending above/below 200-DMA is at 80:20, which clearly suggests that the index is in an uptrend.



Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, the increasing number 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 1:22 and, in the current week, the ratio was13:17, where on an average 13 stocks touched new 52-week highs and 17 stocks hit 52-week lows.On Monday, we have witnessed highest number of stocks making 52-week highs since April 1, 2019.Considering the last three trading sessions, we have seen momentous improvement in the ratio to 17:7 where, on an average,17 stocks had touched new 52-week highs and 7 stocks had touched new 52-week lows. 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
 (Closing price as of May 22, 2019)