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 long-term trend of security. Almost 98 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while only 2 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, the ratio has remained unchanged. Considering the close of February 03, the stocks of Nifty index, on average were trading above its 200-DMA by nearly 21.63 per cent while currently, on average, they are trading above its 200-DMA by 22.04 per cent. Nifty has witnessed a vertical rise of almost 12.13 per cent from the low of 13,596.75, which was registered on January 29, 2021. With this steep upsurge in the index, the distance between 200-DMA and the closing price of the index has also increased significantly. On January 29, the distance between 200-DMA and the closing price of the index was 17.96 per cent and considering Wednesday’s closing price, the difference is 28.20 per cent.

This clearly indicates that the index has been deviating far from its long-term mean. Further, since the last four trading sessions, the index has formed small body candles, which indicates that upward momentum is waning. The above factors are suggesting that the index may witness a temporary breather. 

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 improv-ing their performance. Currently, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, and Nifty Private Bank index, all the stocks were trading above their 200-DMA. On a WoW comparison basis, barring Nifty Pharma index, the ratio of stocks moving above/below their 200-DMA has remained unchanged for all the other sectoral indices. Among the constituents of Nifty Pharma index, in the last five trading sessions, almost 10 per cent of the stocks have slipped below their crucial 200-DMA level. Currently, almost 80 per cent of the constituents of Nifty Pharma index are trading above their 200-DMA and the index itself is trading above its 200-DMA by 14.18 per cent. Last week, on average, the stocks of Nifty Media index were trading above their 200-DMA by 17.86 per cent but in the current week, the average difference between 200-DMA and the close of the stock is narrowed down by 3.71 per cent. This indicates that some overheated counters are reverting to their mean.

Among the constituents of Nifty PSU Bank index, last week, on average, the stocks were trading above their 200-DMA by 31.31 per cent but in the current week, the average difference between 200-DMA and the close of stocks has increased by 5.88 per cent. This indicates that PSU bank stocks have outperformed the benchmark indices in the last five trading sessions. Going ahead, the current structure of Nifty Realty index looks inter-esting as almost 90 per cent of the constituents are trading above their 200-DMA and the momentum is tilted in the favour of bulls.

Indicator To Gauge Internal Strength :This indicator helps us to gauge the internal strength of the mar-ket. 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 basis, the previous week's average ratio was 26:0 while in the current week, the average ratio is 57:0 where, on an average, 57 stocks touched new 52-week highs while on the flip side, not a single stock has hit a new 52-week low. In the last five trading sessions, Nifty 500 index has gained almost 278.40 points or 2.28 per cent, and except Wednesday’s trading session, the index has marked an all-time high in four trading sessions. However, the indicator did not mirror the strength that Nifty 500 index showed in the last five trading sessions. On January 21, 2021, the index has marked an all-time high of 12,167.95 and at that time, almost 43 constituents of the index marked a fresh 52-week high. On Wednesday, the index closed at 12,452.45, which is 284.50 points or 2.33 per cent above its prior all-time high of 12,167.95.

However, this time, only 38 stocks have marked fresh 52-week highs. This clearly suggests that in the current upward rally, the stocks are not participating in the stocks making 52-week high in large numbers, as seen in the month of January 2021.

(Closing price as of Feb 10, 2021)