Sentiment Indicators

200-DMA INDICATOR: This indicator measures 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 the long-term trend of a security. Almost 58 per cent stocks that constitute the Nifty 50, the equity benchmark, are trading above their 200-DMAs; while 42 per cent stocks are trading below their 200-DMAs. The Indian market remains in range since last Wednesday as the market is in a holiday mood and this is reflected well in this indicator. On a w-o-w comparison basis, we observed that only 2 per cent of the stocks have closed above their 200-DMAs. In the last five trading sessions, Titan has managed to closed above their 200-DMA. The majority part of the December month was dominated by bulls, as on an average, the ratio of the stocks trading above/below their 200-DMA is 52:48, while on an average 52 per cent stocks are trading above their 200-DMA and an average of 48 per cent stocks are trading below their 200-DMA. One interesting observation that comes into notice is that, the ratio of stocks trading above/below their 200-DMA is in favour of bulls for the eight consecutive trading sessions, which is the highest since November 11.


With this, from the Nifty 50 space, almost 58 per cent stocks are trading above their 200-DMA, which is the highest since November 29. Considering all the above facts and current structure of indicators, traders should adopt buy on dips strategy.

Sectoral Sentiment Indicator : The sectoral sentiment indicator talks about the number of stocks in the 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 week had been a lacklustre one and not much action is seen as the market is in a holiday mood and this is clearly visible in the sectoral sentiment indicators as well with almost nine sectors remaining unchanged on a week-on-week comparison basis. On a w-o-w comparison basis, the sectoral index-Nifty Reality has seen a substantial improvement as almost 10 per cent stocks have managed to close above their 200-DMAs. On the flip side, the constituents of Nifty Pharma index has seen a minor dip in the stock as trading above its 200-DMA fell to 46.66 per cent from 53.33 per cent last week.


The Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty FMCG, Nifty IT, Nifty Media, Nifty Private Bank and Nifty PSU bank indices remained unchanged on a w-o-w comparison. In the coming weeks, Nifty FMCG 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 six weeks and, presently, it is at even Stevens. The Nifty Metal index continues to shine in this week also, as we have seen an average rebound of 6.42 per cent in the last two weeks. With this, the index itself has managed to close above its 200-DMA after September 28, 2018 for the first time. 

Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, a higher number of stocks reaching 52-week highs and lesser stocks hitting 52-week lows represent a bull market while the opposite suggests a bear market. On a w-o-w comparison, the previous week's average ratio was 14:6 and, in the current week, the average ratio is 11:4, where, on an average, 11 stocks touched new 52-week highs while four stocks hit new 52-week lows. On December 19 and December 20, the average ratio was 12.5:3, but in the last two trading sessions, we saw a minor decline in the ratio to 9.5:6, where an average of 9.5 stocks had touched new 52-week high and six stocks touched new 52-week low.


 These ongoing structural changes clearly suggest that the index is witnessing consolidation amid individual stocks, whereas, picking and dumping is underway. 

*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 Dec 24, 2019)