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 96 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 4 per cent of the stocks are trad-ing below their 200-DMAs. In the last five trading sessions, Britannia Industries slipped below its 200-DMA while on the flip side, Kotak Mahindra Bank has surged above its 200-DMA. From last Wednesday’s close to this Wednesday, Nifty index has gained 158.15 points or nearly 1 per cent. Despite that, the indicator structure has remained unchanged as we have not seen any significant changes in the last five trading sessions.
In the last couple of trading sessions, Nifty has made six attempts to sustain above the 15,900 mark but it failed and witnessed correction. This is clearly visible in this indicator as, since the last 29 trading sessions, the ratio of stocks trading above their 200-DMA is oscillating in the range of 94 per cent to 98 per cent. However, as compared to the prior week, the difference between 200-DMA and the index’s closing price has increased, which is a bullish sign. Further, currently, out of 50 stocks, almost 48 were trading above their 200-DMA while the index itself is trading above its 200-DMA by over 13 per cent. Hence, considering the current structure of the indicator, bulls have an upper hand and any sustainable move above the zone of 15,900-15,950 would lead to a sharp upward move.
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, all the sectoral indices are trading above their 200-DMAs. Among the constituents of Nifty IT, Nifty Media, Nifty Metal, Nifty PSU Bank, and Nifty Realty, all the stocks are trading above their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty Private Bank has seen substantial improvement as almost 20 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty Bank, where nearly 17 per cent of the stocks surged above their 200-DMAs. Among the constituents of Nifty Realty, almost 10 per cent of the stocks have moved above their 200-DMA on a WoW comparison basis. Currently, all the components of Nifty Realty index are trading above their 200-DMA and the index itself is trading above its 200-DMA by nearly 19 per cent.
The difference between 200-DMA and Nifty Realty constituents’ average closing price has surged by over 4 per cent in the last five trading sessions, which is a bullish sign. Besides, Nifty Financial Services index has seen a minor improvement as 5 per cent of the stocks surged above their 200-DMA. On the flip side, Nifty FMCG index has seen a minor decline as nearly 7 per cent of the constitu-ents of the index slipped below their 200-DMA. From the last Wednesday’s high, Nifty IT index has witnessed a correction of nearly 2 per cent in the last five trading sessions. Along with this correction, the difference between 200-DMA and Nifty IT constituents’ average closing price has also narrowed by 2.43 per cent, which indicates profit booking at higher levels. Going ahead, Nifty Metal may be an attention-seeker because the index is on the verge of giving a consolidation breakout and there is no significant development, i.e. no addition or drop was seen in the ratio of stocks moving above/below their 200-DMA since the last nine weeks.
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 fresh 52-week high/low was 28:0 and in the current week, the average ratio is 39:0 where, on an average, 39 stocks touched new 52-week high. On the other hand, not a single stock has hit a new 52-week low. In the last five trading sessions, Nifty 500 index has gained 157.45 points and 1.16 per cent. Along with this upward journey, we have witnessed almost 39 per cent improvement in the stocks marking a 52-week high on a WoW comparison basis.
On Tuesday, the index has marked a fresh all-time high of 13,661.90 level while on Wednesday, the index registered a new record closing high. Despite that, the ratio of stocks marking a fresh 52-week high is declining since the last two trading sessions. In the first three trading sessions of the month of July, on average, 41 stocks have marked 52-week highs from Nifty 500 universe. While, in the last two trading sessions, on average, only 36 stocks have marked a 52-week high. This clearly indicates that as compared to its prior week, the internal strength of the market has improved notably. However, in the last two trading sessions, a minor decline has been witnessed in the stocks marking a fresh 52-week high despite the fact that the index made an all-time high.
(Closing price as of July 07, 2021)