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. From last Wednesday’s close to this Wednesday, Nifty index has lost 65 points or 0.36 per cent. The index traded in the range of 430 points during the last five trading sessions. This clearly reflects in this indicator as the ratio of stocks moving above/below their 200-DMA has remained unchanged on a WoW comparison basis. Currently, almost 92 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 8 per cent of the stocks are trading below their 200-DMAs.

In the last five trading sessions, BPCL has reclaimed its 200-DMA while on the flip side, Bajaj Auto slipped below its 200-DMA. In Nifty universe, the top gainer of the last five trading sessions was ONGC as it gained 16.13 per cent, followed by GAIL, which surged 6.46 per cent. On the other hand, Cipla was the top loser as it lost over 7.5 per cent in the last five trading sessions. After registering an all-time high of 17,947.65, the index has slid into the consolidation. This is clearly visible in this indicator as the difference between 200-DMA and the index’s closing price has been declined by nearly 3 per cent. On September 24, the difference between 200-DMA and the index closing price was nearly 17 per cent and currently, the difference is 14.33 per cent. This clearly indicates that the bullish momentum has been slowed down significantly.
 

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, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT and Nifty Media, all the stocks are trading above their 200-DMA. On a WoW comparison basis, the sectoral index - Nifty Metal has seen significant improvement as nearly 13.33 per cent of its stocks have surged above their 200-DMAs, followed by Nifty Media, where 10 per cent of the stocks have managed to close above their 200-DMAs. On the other hand, the realty index has witnessed profit booking from the higher levels as it lost 4.43 per cent from its 52-week high of 525.05 level. Along with the profit booking, almost 10 per cent of the constituents slipped below their 200-DMA. Currently, the difference between the 200-DMA and Nifty Realty index’s closing price is 40.27 per cent.

Along with Nifty Realty, Nifty Auto has also seen a minor decline as nearly 7 per cent of the constituents slipped below their 200-DMA. In the coming weeks, Nifty IT might be in the limelight because the index is consolidating in a range since the last couple of trading ses-sions and there is no significant development, i.e. no addition or drop was seen in the ratio since the last 56 weeks. From the all-time high level, Nifty IT index has lost over 7 per cent. On September 24, the difference between 200-DMA and the closing of Nifty IT index was nearly 34 per cent. Currently, the difference is just 24 per cent, which indicates that bullish momentum is waning. 

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 43:0 and in the current week, the average ratio is 36:0 where, on average, 36 stocks touched a new 52-week high. On the other hand, on average, not a single stock has hit a fresh 52-week low. In the last five trading sessions, Nifty 500 index has gained 47.60 points or 0.31 per cent. On Wednesday, the index had marked a fresh all-time high of 15,349.20 level.

Despite this upward move, we have seen a decline of over 16 per cent in the stocks marking a 52-week high on a WoW comparison basis. However, from an all-time high level, the index has witnessed a correction of nearly 215 points or 1.39 per cent. This resulted in the formation of a bearish engulfing candlestick pattern on the daily chart. The bearish formation near the all-time high is also confirmed by this indicator. On September 24, the index had marked an all-time high of 15,305.20 and at that time, almost 57 stocks from Nifty 500 witnessed a 52-week high. On Wednesday, the index had surpassed its prior high and registered a fresh all-time high of 15,349.20 level. However, this time, only 34 stocks have marked a 52-week high. This clearly indicates that the internal strength of the market has been weakened as compared to the prior week. 

(Closing price as of Oct 06, 2021)