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. In the last five trading ses-sions, Nifty index gained 277 points or 1.62 per cent while on Tuesday, the index had marked an all-time high of 17,436.50 levels. In the current week also, the difference between 200-DMA and the index closing price has surged by one per cent. Despite this upward journey, the ratio of stocks moving above/below their 200-DMA has remained unchanged on a WoW comparison basis. This clearly indicates that the current week’s upward rally was driven by the index heavyweight counter.

The major contribution was seen from the index bellwether - Reliance Industries as it gained over 7 per cent. Currently, Reliance Industries is trading above its 200-DMA by 18.37 per cent. Along with Reliance Industries, HDFC has also gained nearly 3 per cent. Apart from this index heavyweight stocks, Indus Towers and Shree Cement have also gained over 8 per cent in the last five trading sessions. Currently, the index is trading at an all-time high level but only 82 per cent of the constituents are trading above their 200-DMA. This structure indicates that only selected stocks are witnessing an upward journey. This implies that the health of the market is not up to the mark and needs to be confirmed by price. 

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 FMCG and Nifty IT, all the stocks are trading above their 200-DMA. Despite an upward move in the benchmark indices, not much action was seen in the sectoral indices as among eleven sectors, almost eight have remained unchanged on a WoW comparison basis. The sec-toral index, Nifty Media has seen significant improvement as almost 20 per cent of the constituents of the index have surged above their 200-DMA in the last five trading sessions. From the close of last Wednesday, Nifty Media index has witnessed a pullback rally of 2.60 per cent.

Despite this upward rally, Nifty Media index has failed to sustain above its 200-DMA. Nifty FMCG index has gained 1.56 per cent in the last five trading sessions and also, crossed the 40,000 mark for the first time. Along with this upward rally, nearly 7 per cent of the constituents of Nifty FMCG index have surged above their 200-DMA in the last five trading sessions. Currently, Nifty FMCG index is trading above its 200-DMA by over 15 per cent. On the other hand, among the constituents of Nifty Realty index, almost 10 per cent of the stocks have slipped below their 200-DMA. In the coming weeks, Nifty Bank and Nifty Private Bank might become attention seekers because the index is consolidating in a range and there is no significant development, i.e. no addition or drop was seen in the ratio since the last four 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 a fresh 52-week high/low was 36:1 and in the current week, the average ratio is 43:1 where on average, 43 stocks have touched a new 52-week high. 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 gained 252 points or nearly 2 per cent. On Tuesday, the index has marked an all-time high of 14,852.25 level. This is clearly visible in this indicator as on a WoW comparison basis, we have seen almost 19 per cent improvement in stocks marking a 52-week high.

Currently, Nifty 500 index is trading above its 200-DMA by over 17 per cent. This structure looks a little bit overstretched. However, since the last three trading sessions, the index is consolidating in a narrow range of 139 points. Along with this consolidation, we have seen a minor pause in stocks marking a 52-week high. On September 2, 3 and 6, on average, 49 stocks marked 52-week high and not a single stock has marked a new 52-week low. However, in the last two trading sessions, on average, only 34 stocks have marked 52-week high while one stock marked a new 52-week low. This current structure of indicator indicates that the index may slide into the period of consolidation but stock-specific action is likely to continue. 

(Closing price as of Sept 08, 2021)