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, Coal India has surged above its crucial 200-DMA while on the flip side, Eicher Motors slipped below the 200-DMA. The index is still trading in a confined range of 14,984-14,151 level since the last 31 trading sessions.
Last Thursday, the index had surged above the level of 14,984 and marked a high of 15,044.35 on an intraday basis. However, it did not sustain at higher levels and again entered into a confined range. This is clearly visible in this indicator as, since the last three weeks, the ratio of stocks moving above its 200-DMA has remained unchanged. Due to this period of consolidation, the difference between 200-DMA and index close has been narrowed signif-icantly. On February 16, the difference between 200-DMA and the index close was 22.29 per cent while currently, the difference is 10.21 per cent. Going ahead, the index is likely to consolidate in the range of 14,984-14,151 level. The range breakout of 14,984-14,151 in any direction will decide the next course of the index.
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 the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT and Nifty Metal, all the stocks were trading above their 200-DMA. On a WoW com-parison basis, the sectoral index-Nifty Pharma index has seen a noteworthy improvement as 10 per cent of the constituents of the index have surged above their 200-DMAs, followed by Nifty Metal by 6.67 per cent. On the flip side, Nifty Auto and Nifty Financial Services index have seen a minor decline as almost 6.67 per cent and 5 per cent, respectively constituents slipped below their 200-DMA.
The ratio of stocks moving above/below their 200-DMA of Nifty Bank, Nifty FMCG, Nifty IT, Nifty Media, Nifty Private Bank, Nifty PSU Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis. Nifty Metal has continued its northward journey in the current week also as the index gained nearly 7 per cent in the last five trading sessions. With this, the differ-ence between 200-DMA and Nifty Metal index closing price has also increased by nearly 3 per cent, which is a bullish sign. Currently, Nifty Metal index is trading above its 200-DMA by 38.04 per cent. Along with Nifty Metal, Nifty Pharma index has also seen a bullish momentum. On Wednesday, Nifty Pharma index had surged above its prior swing highs and this upside was supported by a surge in the number of constituents moving above their 200-DMA. Considering the above-men-tioned factors, Nifty Metal and Nifty Pharma are likely to outperform in the next couple of trading sessions.
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 hitting 52-week lows represent a bull market while the opposite, sug-gests a bear market. On a WoW comparison basis, the previous week's average ratio of stocks marking a fresh 52-week high/low was 23:0 and in the current week, the average ratio is 35:0 where on average, 35 stocks touched a new 52-week high while on the flip side, not a single stock has hit a new 52-week low.
Nifty 500 index has continued its ping-pong game between the level of 12,624-11,923. However, the indicator did not portray the same picture, because on a WoW comparison basis, there was significant improvement in stocks, marking new 52-week high. On a WoW comparison basis, the ratio of stocks marking a fresh 52-week high has increased by nearly 66 per cent. Further, on May 04, 2021, from Nifty 500 space, almost 45 stocks have marked a fresh 52-week high, which is the highest since April 09, 2021. This clearly suggests that despite a range-bound activity in the index, the internal strength of the market has improved significantly in the current week. The stock-specific action is likely to continue in the next couple of trading sessions.
(Closing price as of May 05, 2021)