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 simple moving averages. The 200-DMA is considered as an important and one of the basic technical indicators that can be used to determine long-term trend of a security. Almost 72 per cent stocks that constitute the Nifty 50, the bellwether equity benchmark, are trading below their 200-DMAs, while 28 per cent stocks are trading above their 200-DMAs. On a w-o-w comparison basis, we observed that about 2% of the stocks have managed to close below their 200-DMAs. In the last four trading sessions, Reliance Industries and Titan have managed to close below their 200-DMAs, While on the flip side, BPCL has managed to close above its 200-DMA. Since the close of last Wednesday, the Nifty index has witnessed almost 299.75 points or 2.71 per cent downward momentum. But if we look at the chart, the indicator did not mirror the weakness shown by the Nifty index in the last four trading sessions as only 2 per cent stocks have managed to close below their 200-DMA. This clearly indicates that the recent downward move was led by some select heavyweight counters. Among the top five constituents of the Nifty index, Reliance Industries, HDFC and ICICI Bank have witnessed sharp fall in the last four trading sessions. On a w-o-w comparison basis, the index bellwether Reliance Industries was trading above its 200-DMA by 1.47 per cent during last week, but in the current week, the stock has witnessed a sharp fall of 5.33 per cent from the higher levels and it is currently trading below its 200-DMA by about 3.86 per cent. Along with Reliance Industries, HDFC has witnessed fall of 4.15 per cent and ICICI Bank has also slipped by 3.89 per cent.



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 came under pressure after official data released on Friday showed that India’s GDP growth fell to over six-year low of 5 per cent in the June quarter. On a w-o-w comparison basis, the sectoral index Nifty Pharma has seen substantial improvement as 10 per cent stocks have managed to close above their 200-DMAs, followed by Nifty FMCG by 6.66 per cent. On the flip side, among the constituents of Nifty Financial Services, almost 5 per cent stocks have managed to close below their 200-DMAs. The Nifty Auto, Nifty Bank, Nifty IT, Nifty Media, Nifty Metal, Nifty Private Bank, Nifty PSU Bank and Nifty Realty indices remained unchanged on a w-o-w comparison. The government announced the merger of 10 PSU banks into four on Friday, but majority of the PSU bank stocks have witnessed fierce sell-off as concerns of asset quality and earnings worries post-mergers weighed on investors' mind. The Nifty PSU Bank index has remained unchanged on a w-o-w comparison basis since four weeks, but last week the stocks were trading below their 200- DMAs by average of about 20.26 per cent. However, in the current week, we have seen further correction in the stocks by on an average of 3.6 per cent. The slowdown nightmare for the auto sector continued in August also as automakers who have released their sales data for August have shown a double digit decline. This is clearly visible in sectoral sentiment indicator as all the constituents of Nifty Auto sector are trading below their 200-DMAs since last eight weeks and, in the current week also, we have seen further correction in the stocks by on an average of 1.44 per cent.



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 6:51 and, in the current week, the ratio was 7:17, where on an average seven stocks touched new 52-week highs and 17 stocks hit 52-week lows. One interesting fact that comes to notice is that on July 10, 2019, the average weekly ratio turned in favour of the bears and, since then, the average weekly ratio was 5:55, where on an average, five stocks touched new 52-week highs and 55 stocks hit 52-week lows. However, in the current week, the average ratio is 7:17, where on an average, seven stocks touched new 52-week highs and 17 stocks hit 52-week lows, which is lowest since July 10. However, in the coming session, we have to watch whether this marginal pause in the stock marking new 52-week lows is limited to a period of consolidations or we are nearing a bottom on a short term basis.