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 86 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 14 per cent of the stocks are trading below their 200-DMAs. In the last five trading ses-sions, Eicher Motors and Indian Oil Corporation have surged above their crucial 200-DMA. On the other hand, Britannia Industries and Nestle India have tumbled below their 200-DMA. In the month of April, Nifty index had traded in a narrow range of 14,984-14,151 level.

This is clearly visible in this indicator as the ratio of stocks trading above their 200-DMA has oscillated between the zone of 92-82 per cent. From last Thursday’s low of 14,151.40, Nifty index has witnessed over 700 points or a 5.03 per cent upward journey. However, this indicator does not mirror the same strength as shown by the index in the last five trading sessions, as on a WoW comparison basis, the ratio of stocks moving above/below its 200-DMA has remained unchanged. This clearly indicates that the current rally is not backed by broader-based participation while the current rally is led by a heavyweight counter. Going ahead, the index is still trading in a confined range of 14,984-14,151 level. For further upside, the index needs to close above the 15,000 level otherwise, a ping-pong game between the above-mentioned zones may continue. 

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, barring Nifty Media index, all other sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT, all the stocks were trad-ing above their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty Media index has seen a substantial improvement as 20 per cent of the constituents of the index have surged above their 200-DMAs, followed by Nifty Auto by 13.33 per cent. Among the constituents of Nifty Bank and Nifty PSU Bank index, almost 8.33 per cent and 7.69 per cent, respectively stocks surged above their 200-DMA. On the flip side, Nifty FMCG index has seen a noteworthy decline as almost 20 per cent of the constituents have slipped below their 200-DMA.

The ratio of stocks moving above/below their 200-DMA of Nifty Financial Services, Nifty IT, Nifty Media, Nifty Metal, Nifty Pharma, Nifty Private Bank and Nifty Realty indices remained unchanged on a WoW comparison basis. In the last five trading sessions, Nifty index has gained nearly 4 per cent while a major contribution was seen in the banking & financial sector. From the close of April 20, 2021, Nifty Bank index has gained 8.38 per cent, followed by Nifty Private Bank by 8.11 per cent and Nifty Financial Services by 7.48 per cent. Nifty PSU Bank index has also witnessed nearly 10 per cent upside momentum from the low of 1,910.65 level. The difference between 200-DMA and on an average close of banking & financial stocks has increased substantially in the last five trading sessions, which is a bullish sign. 

 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 13:1 and in the current week, the average ratio is 23:0 where, on an average, 23 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 month of April, Nifty 500 index traded in a narrow range of 700 points, which is the lowest monthly range since October 2020. This is clearly visible in this indica-tor as on MoM comparison basis, we have seen nearly 59 per cent decline in the stocks marking a new 52-week high.

In the month of March, on average, 29 constituents of Nifty 500 has marked a fresh 52-week high. While in the month of April, on average, only 17 stocks have marked a fresh 52-week high from Nifty 500 space. This indicates that on MoM basis, the internal strength has deteriorated for the second consecutive month. However, from the low of 11,950.65, Nifty 500 index has gained 567.30 points or 4.74 per cent. This northward journey is supported by a substantial improvement in the stocks, marking a fresh 52-week high. On a WoW compar-ison basis, the ratio of stocks marking a fresh 52-week high has increased by almost 177 per cent. However, despite this upward journey from the lower level, the index is still trading in a defined range of 12,624-11,923 levels. Going ahead, in case the index sustains and closes above the level of 12,624, it may trigger a fresh round of buying.

(Closing price as of Apr 28, 2021)