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 88 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trad-ing above their 200-DMAs while 12 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 6 per cent of the stocks of Nifty have surged above their 200-DMAs. In the last five trading sessions, Indus Towers, Kotak Mahindra Bank, and Zee Entertainment Enterprises have surged above their 200-DMA. On Tuesday, Nifty index had given a five-day consolidation breakout and resumed its upward journey. On Wednesday, the index had marked a fresh all-time high of 17,532.70 level.
The current week’s showstopper is Zee Entertainment Enterprises as it gained over 44 per cent in the last four trading sessions and also, surged above its 200-DMA for the first time after 37 trad-ing sessions. Currently, Zee Entertainment Enterprises Ltd is trading above its 200-DMA by nearly 24 per cent. Apart from this, the IT bellwether - TCS has gained nearly 5 per cent in the last four trading sessions. On September 07, the index has marked an all-time high of 17,436.50. At that time, only 84 per cent of the constituents of the index were trading above their 200-DMA. On Wednesday, the index had registered a fresh all-time high of 17,532.70 level while this time, almost 88 per cent stocks are trading above their 200-DMA. This indicates that the internal strength of Nifty has improved as compared to the prior week. Further, the candlestick chart has also not shown any weakness. Hence, the index may continue its upward journey for the next 2-3 trading sessions and any sustainable close below the prior day’s low will be the first sign of weakness.
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. In the current week, the benchmark indices have marked a fresh all-time high. This is clearly visible in this indicator as almost seven sectors have seen addition in stocks moving above their 200-DMA level. However, the showstop-per of this week is Nifty Media index as it gained nearly 18 per cent in just four trading sessions. Most importantly, Nifty Media index surged above its 200-DMA and is currently, trad-ing above its 200-DMA by over 15 per cent. Along with this upward journey, almost 20 per cent of the constituents of Nifty media index have surged above their 200-DMA. Further, in line with our expectations, Nifty Bank and Nifty Private Bank have seen addition in stocks moving above their 200-DMA. In the last four trading sessions, among the constituents of Nifty Bank and Nifty Private Bank, almost 17 per cent and 10 per cent, respectively of stocks have surged above their 200-DMA.
Among the constituents of Nifty Realty and Nifty PSU Bank, almost 10 per cent and nearly 8 per cent, respectively of stocks have managed to close above their 200-DMA. Nifty Auto and Nifty Financial Services have seen a minor improvement as 6.66 per cent and 5 per cent, respectively of stocks surged above their 200-DMA. The ratio of stocks moving above/below their 200-DMA of Nifty FMCG, Nifty IT, Nifty Metal, and Nifty Pharma indices remained unchanged on a WoW comparison basis. In the last four trading sessions, Nifty IT index has gained 4 per cent while on Wednesday, the index closed above the psychological mark of 36,000 level. Currently, the difference between the close of Nifty IT index and its 200-DMA is over 32 per cent, which looks extremely overstretched. It would be no surprise if the IT stocks stall their momentum and slid into a period of consolidation.
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 hit-ting 52-week lows represent a bull market while the opposite, suggests a bear market. On a WoW comparison basis, the pre-vious week's average ratio of stocks marking a fresh 52-week high/low was 43:1 and in the current week, the average ratio is 54:1 where, on average, 54 stocks touched a new 52-week high. On the flip side, on average, only one stock has hit a new 52-week low. Nifty 500 index continued its northward journey this week also and since the last three trading sessions, it has marked a fresh all-time high. Most importantly, on Wednesday, the index had closed above the psychological level of 15,000 for the first time.
The index has gained almost 217 points or 1.46 per cent in the last four trading sessions. Along with this upward journey, the stock marking 52-week high has also increased by nearly 26 per cent on a WoW comparison basis. As compared to the first week of September, the stocks marking a 52-week high have increased by 50 per cent. In the current week, the majority of action happened in the last two trading sessions, where on average, 53 stocks have marked a 52-week high. While in the first two trading sessions, on average, only 32 stocks have marked a fresh 52-week high. Currently, the index is trading above its 200-DMA by nearly 18 per cent, which looks overstretched. Despite this, we believe that the stock-specific action is likely to continue in the next couple of trading sessions.
(Closing price as of Sept 15, 2021)