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 92 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 8 per cent of the stocks are trad-ing below their 200-DMAs. On a WoW comparison basis, we observed that 4 per cent of the stocks have jumped above their 200-DMAs. In the last four trading sessions, Bharti Airtel and Dr Reddy’s Laboratories have surged above their crucial 200-DMA. Since March 18, 2021, the benchmark index, Nifty is fluctuating in a narrow range of 14,883-14,264 levels. In the last four trading sessions, this range has been narrowed further to 423 points and it is clearly visible in this indicator as it is also oscillating in a narrow range.

From the low of 14,264.40, which was registered on March 25, the index has gained nearly 4 per cent. Along with this upward journey, almost 10 per cent stocks of Nifty 50 has also surged above their 200-DMA. Further, as compared to March 25, the average difference of 200-DMA and close of the stock has also increased by nearly 3 per cent. Considering the close of March 25, the stocks of Nifty index, on average was trading above its 200-DMA by 12.69 per cent while currently, on average, they are trading above its 200-DMA by 15.57 per cent. Taking these factors into account, the bulls are in a dominating position and any sustainable close above 14,900 would lead to a sharp upside. 

Sectoral Sentiment Indicator :
This indicator basically interprets the number of stocks in the sectoral indices trading above/below their 200-day mov-ing averages. This will help us to know which sectors are improving their performance. Currently, barring Nifty Media index, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty Bank, Nifty Financial Services, Nifty IT, and Nifty Private Bank indices, all the stocks were trading above their 200-DMA. During the last four trading sessions, the benchmark indices were trading in a confined range. This is clearly visible in this indicator, as bar-ring Nifty Media and Nifty Financial Services index, the ratio of stocks moving above/below their 200-DMA has remained unchanged for all the sectors on a WoW comparison basis. In line with our expectations, Nifty Metal index has continued its northward journey as the index has gained nearly 9 per cent in the last four trading sessions. The average difference between 200-DMA and the close of Nifty Metal constituents has also increased by 9.47 per cent.

Currently, Nifty Metal index is trading above its 200-DMA by nearly 52 per cent, which looks extremely overstretched. It would be no surprise if we see metal stocks stall their momentum and slid into a period of consolidation. Nifty Media index has continued to show weakness for the fourth consecutive week as over 11 per cent of the constituents have slipped below their 200-DMA. In Nifty Media index, on a cumulative basis, almost 55.55 per cent of the constituents have managed to close below their 200-DMAs in the last four weeks. Nifty Financial Services index has seen a minor improvement as 5 per cent constituents have surged above their 200-DMA. Going ahead, the current structure of Nifty IT and Nifty Pharma index is looking interesting as the difference between 200-DMA and indices’ close has increased substantially, which indicates a further bullish momentum. 

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 previous week's average ratio of stocks marking fresh 52-week high/low was 15:1 and in the current week, the average ratio is 31:0 where, on average, 31 stocks touched a new 52-week high while on the flip side, not a single stock has hit a new 52-week low. From last Wednesday’s close to this Wednesday, Nifty 500 index has gained 167.6 points or 1.36 per cent. However, since the last 13 trading sessions, the index has been oscillating in a range of 500 points while in the last four trading sessions, the range has been narrowed further to 361 points.

Despite the fact that the index has traded in a narrow range, we have seen substantial improvement in the stocks marking a 52-week high. We have seen over 200 per cent improvement in the stocks marking 52-week high as compared to the previous week. On March 12, 2021, Nifty 500 index has marked an all-time high of 12,816.15 and at that time, only 31 stocks have marked a fresh 52-week high from Nifty 500 space. On Wednesday, the index was closed at 12,481.30, which is 2.61 per cent lower than the all-time high but this time, 41 stocks have marked a fresh 52-week high. This clearly indicates that the index is witnessing consolidation, but the stock-specific action will continue to persist until the narrow range breaks out on any side.

(Closing price as of Apr 07, 2021)