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 88 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 12 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 4 per cent of the stocks have slipped below their 200-DMAs. In the last four trading sessions, Indian Oil Corporation and Zee Entertainment Enterprises have slipped below their crucial 200-DMA. Since the last 17 trading ses-sions, the index is playing ping-pong between the range of 14,890-14,250 levels and due to this, the distance between 200-DMA and the index closing price has further narrowed.
On February 16, the index was trading above its 200-DMA by 28.69 per cent and currently, it is trading above its 200-DMA by 12.87 per cent. This clearly indicates that the index is witnessing consolidation after a robust northward journey since March 2020 lows. However, there are some interesting things going on this indicator. On March 25, 2021, the index has marked a low of 14,264.40 and at that time, almost 18 per cent constituents of the index were trading below their 200-DMA. On Wednesday, the index has slipped below its prior swing low and marked the low of 14,248.70 levels. This time, only 12 per cent of the constituents were trading below their 200-DMA, which indicates that the stocks were not participating in the downward move. Considering the current price structure and 200-DMA indicator, the index is likely to continue its ping-pong game between the zones of 14,890-14,250. A decisive trend will emerge only after breaking the above-mentioned levels on any side.
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. Currently, barring Nifty Media index, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT and Realty index, all the stocks were trading above their 200-DMA. In the last four trading sessions, the benchmark index Nifty has plunged by 2.12 per cent. The major contribution in fall was seen from banking & financial sectors, which is clearly visible in this indicator. On a WoW comparison basis, the sectoral index-Nifty Private Bank has seen a notable weakness as 20 per cent of the constituents of the index have tumbled below their 200-DMAs, followed by Nifty Bank by 16.67 per cent. Among the constituents of Nifty Financial Services and Nifty Media index, almost 10 per cent of the stocks have slipped below their 200-DMA. On the other hand, among the constituents of Nifty Realty index, 10 per cent of the stocks have surged above their 200-DMA on a WoW comparison basis.
In line with our expectations, Nifty Metal index has stalled its upward momentum and slid into consolidation. In the last four trading sessions, Nifty Metal has lost almost 5.46 per cent. While Nifty Media index continued its southward journey as the index has lost over 5 per cent in the last four trading sessions. The weakness is clearly visible in this indicator as on a cumulative basis, nearly 66 per cent of the constituents of Nifty Media index have managed to close below their 200-DMAs in the last five weeks. In the last two trading sessions, Nifty IT index has seen a noteworthy weak-ness as from the high of 27,524.60, the index has lost over 6 per cent. Going ahead, considering the current structure of the indicator, Nifty Pharma index is likely to outperform the benchmark indices while on the flip side, Nifty Media index is likely to underperform.
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 31:0 and in the current week, the average ratio is 29:0 where, on average, 29 stocks touched a new 52-week high while on the flip side, not a single stock has hit a new 52-week low. In the last four trading sessions, Nifty 500 index has witnessed a fall of over 500 points or 4.02 per cent.
However, from the low of 11,978.45, the recovery was seen in the index on Tuesday’s trading session. On Tuesday, despite a 1.35 per cent rise in the index, we have not seen any improvement in the stocks marking a fresh 52-week high. Further, on April 08 and 09, on average, 49 constituents of Nifty 500 index have marked a fresh 52-week high. However, on Monday and Tuesday, on average, only 10 constituents have marked 52-week high from Nifty 500 space. This clearly indicates that the internal strength of the market has been weakened significantly in the last two trading sessions. Going ahead, we believe that the index may slide into consolidation while the stock-specific action is likely to continue as we sail through Q4 earning session.
(Closing price as of Apr 13, 2021)