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 18 per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while, 82 per cent of the stocks are trading below their 200-DMAs. In the last five trading sessions, Britannia and Reliance Industries had managed to close above their 200-DMA. On a WoW comparison basis, we observed that four per cent of the stocks have managed to close above their 200-DMAs.

The index bellwether-Reliance Industries managed to close above its 200-DMA, for the first time after February 28, 2020. Also, from the low of March 23, Reliance Industries gained almost 55.72 per cent. Since the last eight trading sessions, the fight between bulls and bears continues and this has resulted in the index trading in the range of 8,820-9,390 amidst rising volatility. This is clearly visible in this indicator as there is no significant development seen since the last eight trading sessions. Considering the current structure of indicator, the index is likely to consolidate in the range of 8,820-9,390 with stock specific action as the earning season is set to pick up. The penetration with strength on either side would open gates for a trending move. Till it happens, we would suggest the market participants, especially traders, to play safe and become aggressive only after the markets find a direction and a momentum.

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 sectors are improving their performance. Considering the current structure of the sectoral sentiment indicator, all the constituents of almost 7 sectors out of 11, are trading below their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty PSU has seen an improvement after three weeks as almost 7.69 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty Media by 7.14 per cent. Nifty FMCG index has saw a minor improvement in the stock, as it is trading above its 200-DMA, surged to 40 per cent from 33.33 per cent in the last week. On the flip side, not a single sectoral index has seen an addition in stocks that have managed to close below their 200-DMAs.

Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Metal, Nifty Pharma, Nifty Private Bank and Nifty Realty indices remained unchanged on WoW comparison basis. The financial sector is truly in pain as among the constituents of Nifty Bank, Nifty Financial Services and Nifty Private Bank, all the stocks are trading below their 200-DMA since the last six weeks while, almost 92.30 per stocks of Nifty PSU Bank are trading below their 200-DMA. With this, Nifty PSU Bank and Private bank are trading below their 200-DMA by 43.61 per cent and 33.15 per cent, respectively while, Nifty Bank and Nifty Financial Services are trading below their 200- DMA by 31.34 per cent and 26.73 per cent, respectively. Nifty FMCG is consistently witnessing new addition in stocks, which are trading above their 200-DMAs since the last three weeks. In Nifty FMCG Index, on a cumulative basis, almost 26.67 per cent constituents have managed to close above their 200-DMAs in the last three weeks. 

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 the lesser number of 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 7:5 and in the current week, the average ratio is 3:4 where, on an average, three stocks touched new 52-week highs while, four stocks hit new 52-week lows. On April 16, April 17 and April 20, the average ratio was 3:1, where the average three stocks had touched 52-week high and one stock had touched 52-week low but in the last two trading sessions, we have seen an addition in the number of stocks making 52-week low to 3:8 where the average three stocks had touched new 52-week high and eight stocks has touched new 52-week low. This clearly suggests that the internal strength of the market had weakened in the last two trading sessions.

However, since the last nine trading sessions, Nifty 500-index has been trading in the range of 7,268-7,712 level and this is clearly visible in this indicator as there is no significant development seen in the ratio of stocks making new 52-week high and low. Going ahead, it is worth noting that the average ratio of stocks making new 52-week high and low since the last nine trading sessions stood at 4:4, which indicates that we are trading at very crucial levels and we may witness a trending move in the next couple of trading sessions. 

*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 Apr 22, 2020)