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 86 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 14 per cent of the stocks are trad-ing below their 200-DMAs. In the last five trading sessions, the index has gained 27.2 points or 0.15 per cent. This is clear-ly visible in this indicator as on a WoW comparison basis, only one stock has slipped below their 200-DMA.

The last week’s showstopper i.e. Zee Entertainment Enterprises Ltd has con-tinued its northward journey this week also as it gained nearly 32 per cent in the last five trading sessions. Currently, the stock is trading above its 200-DMA by 61.41 per cent, which is extremely overstretched. It would be no surprise if we see the upward momentum of Zee Entertainment Enterprises stall and slide into the consolidation. Along with Zee Entertainment Enterprises, ITC has also seen bullish momentum as it gained nearly 13 per cent in the last five trading sessions. Considering the current structure of the indicator, the index is likely to con-solidate in a broader range of 17,792.95-17,326.10 level. The range breakout of 17,792.95-17,326.10 in either direction will decide the next course of the index. 

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-DMA. Among the constituents of Nifty FMCG, Nifty IT, Nifty Media, and Nifty Realty, all the stocks are trading above their 200-DMA. Nifty Media has continued its northward journey this week also, as it gained nearly 14 per cent in the last five trading sessions. In the last two weeks, Nifty Media index has gained 33.42 per cent and currently, it is trading above its 200-DMA by nearly 30 per cent. Currently, all the constituents of Nifty Media index are trading above their 200-DMA. Along with Nifty Media, Nifty Realty index has given a 10-year breakout as in the current week, it gained nearly 7.23 per cent.

Currently, Nifty Realty index is trading above its 200-DMA by 31.12 per cent. On the flip side, Nifty Metal witnessed a sharp decline as the threat of a default by Evergrande, which is China’s second-largest real estate company, has dented the sentiments of the global market. Nifty Metal index has slipped nearly 6 per cent in the last five trading sessions and currently, it is trading above its 200-DMA by 22.16 per cent. The decline in Nifty Metal is clearly visible in this indicator as almost 20 per cent of the constituents of the index have slipped below their 200-DMA. Besides, among the constituents of Nifty Bank and Nifty PSU Bank, almost 8.33 per cent and nearly 8 per cent, respectively stocks have slipped below their 200-DMA. Nifty Financial Services has seen a minor improvement as 5 per cent of the stocks surged above their 200-DMA. Considering the current structure of the indicator, Nifty Media and Nifty Realty are likely to continue their northward journey as the momentum is tilted in the favour of bulls. 

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 previous week's average ratio of stocks marking fresh 52-week high/low was 54:1 and in the current week, the average ratio is 34:0 where, on an average, 34 stocks touched new 52-week highs. On the other hand, on average, not a single stock has hit a new 52-week low. Last Thursday, Nifty 500 index had marked a fresh all-time high of 15,207.70 level. Thereafter, in line with our expectations, we saw profit booking from higher levels and the index has witnessed a correction of over 3 per cent. However, in the second half of Tuesday’s session, we had seen smart recovery from the lower level.

From the low of 14,734.70, the index has recovered nearly 2 per cent. In the last five trading sessions, the index has lost 30 points or 0.19 per cent. Along with this correction from the higher levels, the stocks marking a 52-week high have decreased significantly by over 37 per cent on a WoW comparison basis. In the current week, on average, only 34 stocks have marked a 52-week high, which is the lowest in the last four weeks. Further, on Tuesday, from Nifty 500 universe, only 16 stocks have marked a new 52-week high, which is the lowest since the last 18 trading sessions. This clearly indicates that the internal strength of the market has weakened as compared to the prior week. Considering the current structure of the indicator, the index may slide into the period of consolidation but stock-specific action is likely to continue

(Closing price as of Sept 22, 2021)