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 32 per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while, 68 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 8 per cent of the stocks have managed to close above their 200-DMAs. In the last five trading sessions, Adani Ports, Asian Paints, Bharti Infratel and Eicher Motors has managed to close above its 200-DMA. For the first time since February 2020, Eicher Motors has managed to close above its 200-DMA.

On June 08, 2020, Nifty index has marked a high of 10,328.50 and during that time, the ratio of stock trading above/below 200-DMA stood at 26:74, where 26 per cent stocks were trading above their 200-DMA and 74 per cent stocks were trading below their 200-DMA. On June 23, the index has managed to close above the high of 10,328.50 and this time, the ratio of stock trading above/below 200-DMA stood at 34:66. Also, on June 23, 2020, the ratio of stocks trading above/below its 200-DMA stood at 34:66, which is the most-improved ratio since February 27, 2020. This clearly suggests that, along with the upmove in the benchmark index-Nifty, the ratio of stock trading above/below 200-DMA is also improved. Going ahead, it will be interesting to watch the behaviour of index as it is trading just 5.51 per cent below its 200-DMA.

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. On a WoW comparison basis, as many as 15.35 per cent of the stock components of Nifty PSU Bank index have managed to close above their 200-DMAs, followed by Nifty FMCG, where 13.33 per cent components surged above the crucial 200-DMA. Among the constituents of Nifty Realty, about 10 per cent stocks have moved above their 200DMA as well as Nifty Media, where 7.15 per cent component moved above the crucial 200-DMA. Nifty Metal index has saw a minor improvement in the stock, as the stock trading above its 200-DMA surged to 26.66 per cent from 20 per cent last week. On the flip side, not a single sectoral index has seen addition in stocks that have managed to close below their 200-DMAs.

Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Pharma and Nifty Private Bank indices remained unchanged on a WoW comparison. In the last five trading sessions, the benchmark index Nifty has gained 425.15 points or 4.29 per cent and a major contribution was seen from the financial sector as among the constituents of Nifty PSU bank index, we have seen an average surge of 8.91 per cent, followed by Nifty Financial Services by 7.60 per cent. Among the constituents of Nifty Bank index, last week, the stocks were trading below their 200-DMAs by an average of about 33.05 per cent but in the current week, we have seen an average rebound by 7.15 per cent. Going ahead, the current structure of Nifty IT and Nifty Auto index looks interesting as the indices are trading just 2.01 per cent and 5.11 per cent, respectively, below their 200-DMA.

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 9:0 and in the current week, the average ratio is 13:0 where, on an average, 13 stocks touched new 52-week high while on the flip side, not a single stock hit new 52-week lows. In the last five trading sessions, Nifty 500 index has gained 355.80 points or 4.37 per cent and this is reflected well in this indicator, as we have seen the highest weekly average number of stocks making new 52-week highs since February 2020.

In the last two trading sessions, the index has witnessed an upside of almost 2.51 per cent. However, the indicator did not mirror the strength as Nifty 500 index has shown in the last two trading sessions. As on June 18, June 19 and June 22, the average ratio of stocks making new 52-week high/low was 14:0 but in the last two trading sessions, we saw a minor decline in the stocks making 52-week high as the ratio stood at 10:0, where on an average, 10 stocks had touched new 52-week high and zero stocks touched new 52-week low. Going ahead, we have to watch whether this minor decline in stocks making new 52-week high will be limited to the period of consolidations or calm before the storm i.e. a pause before the fresh round of buying starts.
(Closing price as of June 24, 2020)