Sentiment Indicators

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. Almost 48 per cent stocks that constitute the Nifty 50, the equity benchmark, are trading above their 200-DMAs, while 52 per cent stocks are trading below their 200-DMAs. On a w-o-w comparison basis, we observed that about 6 per cent of the stocks have closed below their 200-DMAs. In the last five trading sessions, Axis Bank, Induslnd Bank and JSW Steel has managed to close below their 200-DMA. 

As we have predicted in the last report that Bharti Airtel and ICICI Bank may stall their momentum and slide into a period of consolidation and accordingly, we have seen on an average 3.41 per cent cool off in abovementioned stocks. A close fight between bulls and bears have been observed in the last 29 trading sessions as the index is trading in the range of 360 points. This is reflected well in this indicator and if we look at the current structure of indicator, a consistent deterioration has been witnessed since October 2019 despite the index marking a fresh all-time high. However, as of now, the ratio is contracted significantly and it is likely to expand in upcoming trading sessions as the indicator has the nature of expansion after the contraction. The current structure of indicator is clearly indicating that we are trading at very crucial levels and the market participant is eagerly waiting for some exciting news from domestic and foreign shores. The penetration with strength on either side would open gates for a trending move.

Sectoral Sentiment Indicator : 

The sectoral sentiment indicator talks about the number of stocks in 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 continued its losing streak in current week also as across the broad, selling in most of the sectors dragged the benchmark indices to lower levels. To begin with, a major weakness was seen in financial sector since, on a w-o-w comparison basis, as many as 30 per cent of the stock components of the Nifty Private Bank have managed to close below their 200-DMAs, followed by Nifty Bank where 25 per cent components slipped below their crucial 200-DMA. Among Nifty Financial Services, Nifty Pharma and Nifty Realty, about 10 per cent each of the stock constituents had moved below 200-DMA. Among the Nifty Auto, Nifty Media and Nifty metal, about 6.66 per cent each of the stock constituents had slipped below 200-DMA.While on the flip side, not a single sectoral indices that had seen addition in stocks have managed to close above their 200-DMAs. 

The Nifty FMCG, Nifty IT and Nifty PSU Bank indices remained unchanged on a week-on-week comparison. The Nifty Auto index is consistently witnessing new addition in stocks since the last two weeks, which are trading below their 200-DMAs. On a cumulative basis, almost 26.66 per cent constituents have managed to close below their 200-DMAs in the last two weeks. In the last five trading sessions, the financial sector has seen substantial decline as the stocks of Nifty PSU Bank on an average fell by 6.7 per cent, followed by Nifty bank by 5.64 per cent and Nifty Private Bank by 4.33 per cent. The banking benchmark index Bank Nifty is trading above its 200-DMA by 5.90 per cent and among the constituents, only four stocks are trading above their 200-DMA, that are HDFC Bank, ICICI Bank, Kotak Mahindra Bank and State Bank of India. This clearly indicates that only a handful of stocks have helped the Banking index to hold above its crucial 200-DMA.

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. The Nifty 500 index has lost almost 145.75 points or 1.48 per cent in the last five trading sessions and this is reflected well in this indicator as there are four facts that turned into the favour of bears. To begin with, on a w-on-w comparison basis, the previous week's ratio was 10:4 and, in the current week, we have seen it for the first time after October 16, 2019 that the average ratio is inclined in favour of the stocks declining to 52-week lows to 6:15, wherein on an average, six stocks touched new 52-week highs and 15 stocks hit 52-week lows. Second one is that in the current week, the average number of stocks making 52-week low was higher since October 2019. 

Third one is, on December 06, we had seen that the ratio has turned in favour of the bears for the first time after October 18, 2019. And the last one is, on Wednesday, where we witnessed highest number of stocks making 52-week low since October 15, 2019. This clearly indicates that in the current week, the overall health of the market has weakened significantly. Considering the significant additions in the stock marking 52-week low, it clearly indicates that the bears have an upper hand.