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 82 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 18 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 8 per cent of the stocks of Nifty have surged above their 200-DMAs. In the last five trading sessions, Coal India, Eicher Motors, ITC, and Shree Cement have surged above their 200-DMA. Nifty index has gained 441.60 points or nearly 3 per cent in the last five trading sessions.
Besides, for the first time, Nifty has crossed the milestone level of 17,000. The journey from 16,000 to 17,000 was done in just 19 trading sessions. This is the second-fastest 1,000 points upward rally since March 2020. Along with this upward jour-ney, almost 8 per cent of the constituents of the index have surged above their 200-DMA. The major contributors of this week’s rally are Asian Paints, Axis Bank, Bajaj Finance, Bharti Airtel, and Shree Cement. These constituents of the index have gained more than 8 per cent in the last five trading sessions. Further, along with this northward journey, the difference between index closing and its 200-DMA has also surged sig-nificantly. Last Wednesday, the difference between the index closing and its 200-DMA was 12.53 per cent while currently, the difference is 14.62 per cent. Nifty index is trading above its 200-DMA since the last 281 trading sessions, which is the highest since October 2018. Going ahead, the index may slide into the period of consolidation after a robust upward move but stock-specific action is likely to continue.
Sectoral Sentiment Indicator :
This indicator basically interprets the number of stocks in the sectoral indices that are 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 other sectoral indices are trading above their 200-DMA. Nifty Auto had reclaimed its 200-DMA on Tuesday. Among the constituents of Nifty IT and Nifty Realty, all the stocks were trading above their 200-DMA. Nifty Realty index has outperformed the benchmark indices in the last five trad-ing sessions as it gained 9.33 per cent. Along with this upward rally, among the constituents of Nifty Realty index, almost 10 per cent of the constituents surged above their 200-DMA. Currently, all the constituents of Nifty Realty index were trading above their 200-DMA while the index itself is trading above its 200-DMA by 22 per cent. Along with Nifty Realty index, nearly 8 per cent of the constituents of Nifty PSU Bank index surged above their 200-DMA.
Among the constituents of Nifty Auto, Nifty FMCG and Nifty Metal, nearly 7 per cent each constituent surged above their 200-DMA. Nifty Financial Services index has seen a minor increment as 5 per cent of the constituents surged above their 200-DMA. On the flip side, among the constituents of Nifty Media index, almost 10 per cent of the stocks have slipped below their 200-DMA. In Nifty Media index, on a cumulative basis, almost 30 per cent of the constituents have slipped below their 200-DMAs in the last two weeks. Nifty Media index is trading below its 200-DMA for the last nine trading sessions. The ratio of stocks moving above/below their 200-DMA of Nifty Bank, Nifty IT, Nifty Metal, Nifty Pharma and Nifty Private Bank indices remained unchanged on a WoW comparison basis. Going ahead, con-sidering the current structure of the indicator, Nifty FMCG, Nifty Pharma, and Nifty Realty are likely to outperform the benchmark indices.
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 18:6 and in the current week, the average ratio is 36:1 where on average, 36 stocks touched new 52-week highs. On the other hand, on average, only one stock has hit a new 52-week low. In the last five trading sessions, Nifty 500 index has witnessed a robust upward momentum as it gained 457.75 points or 3.24 per cent.
Out of the last five trading sessions, Nifty 500 index has marked a record high in four trading ses-sions. This is clearly visible in this indicator as we have seen significant improvement in the stocks marking a 52-week high. On a WoW comparison basis, the average stocks marking a 52-week high from Nifty 500 have increased by 100 per cent. At the same time, we have seen a significant decline in the stocks marking a 52-week low as compared to the prior week. This clearly indicates that along with the rise in the index, the stocks have started participating in an upward journey, which was completely missing in the last couple of trading sessions of the month of August. The internal strength of the market has improved significantly, and bulls may continue to dominate.
(Closing price as of Sept 01, 2021)