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 important as it is one of the basic technical indicators that can be used to determine the longterm trend of a security. Almost 60 per cent of the stocks that constitute Nifty 50, the equity benchmark index, are trading above their 200-DMAs while, 40 per cent stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 4 per cent of the stocks have closed above their 200-DMAs. In the last five trading sessions, Axis Bank, Grasim and Titan has managed to close above its 200-DMA while on the flip side, Power Grid has managed to close below its 200- DMA.
  
The majority part of January month was dominated by bulls as on an average, ratio of stocks trading above/below their 200-DMA stood at 59:41, while, on an average, 59 per cent stocks are trading above their 200-DMA and on an average, 41 per cent stocks are trading below their 200-DMA. With this, the ratio of stocks trading above/below their 200-DMA is in favour of bulls for 33 consecutive trading sessions, which is the highest since July 05, 2019. Going ahead, if you look at the current structure of this indicator, the uncertainty over the Budget is clearly visible, as the ratio is oscillating in a range since the last 15 trading sessions. However, as on Wednesday, almost 60 per cent stocks from Nifty 50 space are trading above their 200-DMAs, which clearly suggest that the bulls are going into major event with a slight upper hand over the bears.

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. Nifty Index has gained 22.60 points or 0.18 per cent since last Wednesday’s close. This looks like the investors have adopted a cautious stance ahead of Union Budget FY 2020-21 and this is clearly visible in the sectoral sentiment indicators as almost 7 out of 11 sectors remain unchanged on a WoW comparison basis. On a WoW comparison basis, the sectoral index Nifty Financial Services has seen a substantial improvement as 25 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty Private Bank by 20 per cent and Nifty Bank by 16.67 per cent. Nifty FMCG index has saw a minor dip in the stock, as the stock trading above its 200-DMA fell to 66.66 per cent from 73.33 per cent last week.

Nifty Auto, Nifty IT, Nifty Media, Nifty Metal, Nifty Pharma, Nifty PSU Bank and Nifty Realty remain unchanged on WoW comparison. Nifty Metal index has lost almost 3.29 per cent since last Wednesday’s close post Coronavirus fear spreads. And if you look at the current structure of Nifty Metal index, almost 73.33 per cent stocks are trading above its 200-DMA, despite that, the index has managed to close below its 200-DMA after 24 trading sessions. The current structure of Nifty Bank index looks interesting as the index is trading just 2.57 per cent above its 200-DMA and among the constituents of index, the ratio of stocks trading above/below its 200-DMA stood at 50:50 ratio with no meaningful thrust, showing a lack of directional bias.

Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among Nifty 500 stocks, a higher number of stocks reaching 52-week highs and lesser stocks hitting 52-week lows represent a bull market. The opposite suggests a bear market. On a WoW comparison, the previous week's average ratio was 39:4 and, in the current week, the average ratio is 37:4, where, on an average, 37 stocks touched new 52-week highs while four stocks hit new 52-week lows. Nifty 500 index has gained almost 136.75 points or 1.38 per cent in the month of January 2020 and five times, the index has made an all-time high in January. This is reflected well in this indicator as we have seen not only seen that there is a significant addition in the stock marking new 52-week high but also a notable decline in the stock marking new 52-week low.

On a MoM comparison, the previous month's average ratio was 11:8 and, in the current month, the average ratio is 31:3, where, on an average, 31 stocks touched new 52-week highs while, three stocks hit new 52-week lows. With this, in the current month, the average number of stocks making new 52-week high was the highest since February 2019 and the average number of stocks making new 52-week low was lowest since May 2019. This clearly suggests that the bulls are in a strong position ahead of the major event-Budget 2020.