Sentiment Indicators
200-DMA INDICATOR:
This indicator measures the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving averag-es. 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 94 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trad-ing above their 200-DMAs while 6 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 2 per cent of the stocks have managed to close above their 200-DMAs. In the last five trading sessions, Hindustan Unilever has managed to close above its 200-DMA.
After registering the high of 15,431.75, Nifty index has wit-nessed a correction of over 6 per cent in nine trading sessions. Along with this downward move, the overheated stocks have reverted to their mean. However, after registering the low of 14,467.75, Nifty gained almost 777.85 points or 5.37 per cent. This pullback rally is mainly due to the sharp bounce in some heavyweight counters. From the low of February 26, Infosys, ICICI Bank, and TCS have gained 7.63 per cent, 6.97 per cent, and 6.21 per cent, respectively. The index bellweth-er-Reliance Industries has also gained nearly 7 per cent in the last five trading sessions. Considering the current structure of the indicator, it would be prudent to participate in the stock-specific action for the next couple of trading sessions.
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, Nifty Private Bank, and Nifty PSU Bank index, all the stocks were trading above their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty FMCG has seen a notable improvement as 13.34 per cent of the index constituents have surged above their 200-DMAs, followed by Nifty Media by 11.11 per cent. The ratio of stocks moving above/below their 200-DMA of Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Metal, Nifty Pharma, Nifty Private Bank, Nifty PSU Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis.
Nifty PSU Bank has underperformed in the last five trading sessions and this is clearly visible in this indicator. Last week, on average, the stocks of Nifty PSU Bank index are trading above their 200-DMA by 57.35 per cent but in the current week, the average difference between 200-DMA and the close of the stock is narrowed by 5.35 per cent. Nifty Metal has continued its northward journey as the index gained 7.40 per cent in the last five trading sessions. From the low of 3,062.70, Nifty Metal index has gained over 32 per cent in just 23 trading sessions. Currently, Nifty Metal index is trading above its 200-DMA by 54.19 per cent. Among the constituents of Nifty Metal, Hindustan Copper is trading above its 200-DMA by 212 per cent, followed by APL Apollo Tubes by 107 per cent. It would be interesting to watch the behaviour of the above-mentioned stocks as they look extreme-ly overstretched. It would be no surprise if we see these stocks
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 hit-ting 52-week lows represent a bull market while the opposite, suggests a bear market. On a WoW comparison basis, the pre-vious week's average ratio was 42:0 while in the current week, the average ratio is 61:0 where, on average, 61 stocks touched new 52-week highs whereas, on the flip side, not a single stock has hit a new 52-week low. If you recall, we have mentioned in our previous note that the stock-specific action is likely to continue in the market. In line with our anticipation, on average, 61 stocks from Nifty 500 universe have marked fresh 52-week highs during the last five trading sessions.
On February 16, Nifty 500 index has marked an all-time high of 12,724.55 and at that time, 64 stocks have marked fresh 52-week highs. However, on Wednesday, the index has sur-passed the previous all-time high levels and marked a fresh all-time high of 12,781.85 levels. This time, almost 78 stocks from Nifty 500 space, has marked fresh 52-week highs, which indicates that the market is witnessing broad participation in the rally. Besides, in the current week, the average number of stocks marking a fresh 52-week high is highest than the second week of January 2021. In addition to this, since the last 67 trading sessions, not a single stock has marked a fresh 52-week low. Taking all the above facts into consideration, we can say that the internal strength of the market has improved remarkably in the last five trading sessions and bulls may con-tinue to rule.
(Closing price as of Mar 03, 2021)