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 90 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trad-ing above their 200-DMAs while 10 per cent of the stocks are trading below their 200-DMAs. In the last five trading sessions, Nestle India has surged above its crucial 200-DMA. On a WoW comparison basis, we observed that 2 per cent of the stocks have surged above their 200-DMAs. In the last five trading sessions, Nifty index has gained almost 333.45 points or 2.27 per cent.
Along with this northward journey, the index has also managed to close above the psychological mark of 15,000 on Tuesday for the first time since March 12, 2021. However, the indicator did not mirror the same strength as shown by the index in the last five trading sessions. On March 12, 2021, the index had closed above the 15,000 mark and at that time, almost 94 per cent of the constituents of Nifty index were trading above their 200-DMA. On Tuesday, the index had surged above the 15,000 mark but this time, only 90 per cent of the constituents were trading above their 200-DMA. This clearly suggests that this upward rally is not backed by broader-based participation while the current rally is led by some heavyweight counters.
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, all the sectoral indices are trad-ing above their 200-DMAs. Among the constituents of Nifty IT and Nifty Metal, all the stocks are trading above their 200-DMA. In line with our expectations, we have seen an addition in stocks moving above their 200-DMA in Nifty Media index. On a WoW comparison basis, the sectoral index-Nifty Media index has seen a substantial improvement as 10 per cent of the constituents of the index have surged above their 200-DMAs. Nifty FMCG index has seen a minor improvement as the stock trading above their 200-DMA surged to 93.33 per cent from 86.66 per cent last week.
The ratio of stocks mov-ing 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 indi-ces remained unchanged on a WoW comparison basis. Nifty Metal index has seen some cool-off from the higher levels as the index lost almost 278 points or 5 per cent from the high of 5,524.25 level. The difference between the closing price of the index and its 200-DMA has also narrowed by 10.59 per cent, which indicates profit booking at higher levels. Nifty Auto index has continued its outperformance even this week by gaining almost 2.35 per cent in the last four trading ses-sions. The difference between 200-DMA and the closing price of Nifty Auto index has also increased by almost 3 per cent, which is a bullish sign. Currently, Nifty Auto index is trading above its 200-DMA by 12.59 per cent.
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 49:0 while in the current week, the average ratio is 37:0 where on average, 37 stocks touched new 52-week highs while on the flip side, not a single stock has hit a new 52-week low.
On March 12, 2021, Nifty 500 index has marked an all-time high of 12,816.15 and at that time, 31 stocks have marked a fresh 52-week high. However, on Wednesday, the index has surpassed its earlier all-time high level and marked a fresh all-time high of 12,882.50 levels. This time, almost 40 stocks from Nifty 500 space, has marked fresh 52-week highs, which indicates that the market is witnessing broad participa-tion in the rally and bulls may continue to rule.
(Closing price as of May 19, 2021)