Sentiment Indicators

200-DMA INDICATOR [EasyDNNnews:PaidContentStart]
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 a security. Almost 74 per cent of the stocks that constitute the Nifty 50 equity benchmark index are trading above their 200-DMAs while 28 per cent of the stocks are trading below the 200-DMAs which is at 26 level in the last week. This week Bajaj FinServ closed below 200 DMA. Last Thursday, Nifty experienced a significant selloff of around 1.55 per cent, touching the lower range of its trading channel. However, bulls managed to protect these support levels once again, as Nifty recovered from a low of 21,821 to reach 22,297.55. The recent low of 21,821 is now a crucial level to watch in the upcoming sessions, while the 22,500 level represents potential resistance for bulls.



The gap between Nifty’s closing value and its 200-day moving average (DMA) has narrowed to approximately 6.31 per cent, down from 7.1 per cent last week, indicating increased bearish sentiment. Despite this overall weakness, stocks like M&M, Hero MotoCorp, Adani Ports, and L&T have shown strong weekly surges and are currently gaining market attention. Traders should monitor these stocks for potential trading opportunities amidst the broader market volatility. 

SECTORAL SENTIMENT INDICATOR
This indicator assesses the number of stocks in sectoral indices that are trading above or below their 200-day moving averages. It provides insights into which sectors are improving or declining in performance. Currently, all sectors closed above its 200-DMA indicating an overall positive performance in the market. This past week, the stock market exhibited varied movements across different sectors, with notable changes in the percentage of stocks trading above their 200-day moving averages (200-DMAs). The only sector to show positive change was Nifty Auto, which increased by 6.66 per cent. On the downside, Nifty PSU Bank saw a massive fall of 41.66 per cent in the number of stocks trading above their 200-DMAs. Nifty IT and Nifty FMCG dropped by 20 per cent and 13.33 per cent, respectively. Nifty Realty and Nifty Financial Services declined by 10 per cent and 5 per cent, respectively. Other sectors like Nifty Media, Nifty Pharma, Nifty Metal, Nifty Private Bank, and Nifty Bank remained relatively neutral. Over the last five trading sessions, markets traded higher. The Nifty Small Cap 250 mirrored the benchmark index, while the Nifty Midcap 150 outperformed both indices, retracing more than 70 per cent of the previous fall. Sectoral indices like Nifty Metal and Nifty Realty were the star performers of the week, with strong buying interest in both sectors.



These sectoral stocks should be on the radar for long-term opportunities. Nifty Pharma, Nifty FMCG, and Nifty Auto remained rangebound, offering potential setups for range breakout traders. Nifty IT could be a potential reversal candidate for next week, making it worth monitoring for contra bets. 

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 a lesser number of stocks touching 52-week lows represents a bull market while the opposite suggests a bear market. The average ratio of stocks marking a fresh 52-week high/low this week stood at 11:6, while in the last week, the ratio stood at 18:6. This week, on an average, 11 stocks hit their fresh 52-week high whereas on the flip side on an average 6 stock hit their fresh 52-week low. Despite the recovery in markets, Foreign Institutional Investors (FIIs) continued their selling spree, offloading around Rs 20,500 crore. However, despite this selling pressure, the broader market index Nifty 500 managed to recover from lower levels and retraced 50 per cent of the previous rally, closing just below the 20,800 level. Now, the nearest technical and psychological resistance level is at 21,000, which will be crucial to watch in the coming days. Bulls may drive the rally as long as the index remains above the 20,200 level. Market indicators signal caution for yet another week, with a decrease in stocks reaching new highs (from 18 to 11) and an increase in those hitting new lows (from 4 to 6).



This shift suggests that investors are becoming more selective, likely focusing on stocks or sectors with robust earnings potential and resilient fundamentals. This selective approach may continue until there is more clarity in market direction and sentiment.

(Closing price as of May 15, 2024)

*LEGEND:  ◼ DMA - Daily Moving Average. ◼ MACD - Moving Average Convergence Divergence ◼ RMI - Relative Momentum Index ◼ ROC - Rate of Change ◼ RSI - Relative Strength Index