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 54 per cent of the stocks that constitute the Nifty 50, the equity benchmark index, are trading above their 200-DMAs, while 46 per cent stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 2 per cent of the stocks have closed below their 200-DMAs. In the last five trading sessions, Ultratech Cement has managed to close above its 200-DMA while on the flip side, Axis Bank and Induslnd Bank has managed to close below its 200-DMA.

From an all-time high level, the Nifty index has witnessed almost 364.30 points or 2.93 per cent downward momentum. But if we look at the chart, the indicator did not mirror the weakness as the Nifty index showed in the last 13 trading sessions, since only 4 per cent of the stocks have managed to close below their 200-DMA. This clearly indicates that the recent downward move is led by some selected heavyweight counter. The index bellwether-Reliance Industries has marked an all-time high on December 20, 2019. At that time, the stock was trading above its 200- DMA by 19.41 per cent, but in the last 13 trading sessions, the stock has witnessed a fall and currently, it is trading above its 200-DMA by about 11.65 per cent. Along with Reliance Industries, the ICICI Bank has also witnessed a fall of 4.75 per cent and HDFC Bank also slipped by 3.69 per cent from its all-time high level.

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 stock market has witnessed the biggest sell-off in the recent months as US-Iran tensions knocked down global markets. This is reflected well in sectoral sentiment indicator as on a WoW comparison basis, the sectoral index Nifty Private Bank has seen a substantial decline as 30 per cent of the stocks have managed to close below their 200-DMAs, followed by Nifty Bank by 25 per cent and Nifty Financial Services by 10 per cent.

The Nifty FMCG index has seen a minor dip in the stock, as the stock trading above its 200- DMA, fell to 60 per cent from 66.66 per cent last week. With this, the index itself managed to close below its 200-DMA after September 20, 2018. On the flip side, among the constituents of Nifty IT and Nifty Realty, almost 10 per cent stocks each, have managed to close above their 200-DMAs, followed by Nifty Metal by 6.66 per cent. The Nifty Auto, Nifty Media, Nifty Pharma and Nifty PSU Bank indices remained unchanged on a WoW comparison. In the last five trading sessions, the financial sector has seen a substantial decline from the high of January 02, 2020. The Nifty PSU Bank index has also lost almost 7 per cent, followed by Nifty Bank by 3.36 per cent and Nifty Private Bank by 3.09 per cent. The banking benchmark index, Bank Nifty, is trading above its 200-DMA by 4.70 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. In the coming weeks, Nifty IT may be an attention seeker as the recent price action suggests a further momentum in the index because of the rise in USD/ INR and IT bellwether Infosys, is all set to declare its Q3 results followed by TCS.

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 WoW comparison, the previous week's average ratio was 17:5 and, in the current week, the average ratio is 16:2, where, on an average, 16 stocks touched new 52-week highs, while two stocks hit new 52-week lows. From the high of January 02, 2020, the Nifty 500 index has witnessed almost 283.65 points or 2.84 per cent downward move.

Despite of that, we have seen a decline in stocks hitting new 52-week low and stocks hitting new 52-week high remained almost same as compared to the last week. With this, on January 02, 2020 there were 26 new stocks that have registered new 52-week highs, which is the highest number of stocks since the month of November 2019. This clearly indicates investors are utilising dips to buy quality stocks, ahead of Q3 results and Budget.