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 a security. Almost 68 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 32 per cent of the stocks are trading below the 200-DMA. On a weekly basis, we observed that 6 per cent of the stocks of Nifty have surged above their 200- DMA. In the last five trading sessions, HDFC Bank, IOC, and M&M have soared above their 200-DMA while none of Nifty stocks fell below the 200-DMA. From last Wednesday’s close to this one, Nifty gained about 309 points or 2.08 per cent.
On Friday and Monday, it formed a strong bullish can- dle and indicated a strong price structure. It formed a gap on Monday, which was about a per cent. It hit the week’s high of Rs 18,114.65 before slipping about 2 per cent. The 18,100- level emerged as strong resistance, which the index was unable to crack. Thus, the index is expected to face strong resistance on the higher levels. However, during the week, a good rise in the number of stocks surging above their 200-DMA indicator is expected to bring positivity to the index. Following this move, the difference between the index close and 200-DMA has increased and currently, stands at 4.07 per cent, which was 2.56 per cent last week. Thus, with an increase in the number of stocks surging above the key indicator, we found that the index rose on a WoW basis. Going into the next week, any increase in the number of stocks surging above their key indi- cator would be further met with positivity.
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. Most of the sectoral indices dis- played a strong performance this week. All the sectoral indices, apart from Nifty Pharma and Nifty FMCG, are trading above their 200-DMA. On a WoW comparison basis, Nifty FMCG saw a maximum of about 26.67 per cent of its constituents surging above their 200-DMA. Nifty Media and Nifty Private Bank saw this number to be at 20 per cent. It was followed by Nifty Financial Services and Nifty PSU Bank, which saw about 10 per cent & 7.69 per cent of their constituents, respectively, rising above the key indicator.
Similarly, Nifty Auto and Nifty Metal saw about 6.67 per cent of their constit- uents surging above the indicator. However, Nifty Pharma saw about a 10 per cent decline in its constituents below the key indicator. Meanwhile, Nifty Realty saw no change in its con- stituents crossing above/below the key indicator. The financial sector, especially Nifty PSU Bank, showcased an amazing performance as it gained nearly 7 per cent during the week. Moreover, it crossed above its prior swing high of 2,920.40. On the technical chart, the index formed strong bullish can- dles, which possessed strong momentum. Thus, the index is likely to be in focus for the next week. On the other hand, Nifty IT showed a dismal performance this week and fell by nearly 2 per cent. On Wednesday, the index turned out to be the worst performer among the sectoral indices and fell about 1.63 per cent. It formed a strong bearish candle and slipped below its 20-DMA. Thus, next week, Nifty IT is to be seen with caution.
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 average ratio of stocks marking a fresh 52-week high/low last week was 18:11 while this week, the ratio largely turned in the favour of bulls and stood at 19:3, where, on average, 19 stocks touched a new 52-week high. On the flip side, on average, three stocks have hit a new 52-week low.
Since last Wednesday’s close, Nifty 500 index has climbed 431 points or 2.91 per cent. During the week, the broader index continued to trade higher and hit the week’s high at 15,477.80, before receding a little. Moreover, the index crossed above its prior swing high of 15,304.60. Interestingly, the number of stocks hitting their 52-week low came down drastically with such a strong upmove. In the last three trading sessions, the average number of stocks hitting the 52-week low was reduced to zero, which took place after 39 trading sessions. Moreover, the stocks hitting 52-week high also increased and went past 20. Thus, with the ratio turning towards the bulls, the index is expected to trade higher next week. Heading onto the next week, any further increase in the average number of 52-week high stocks shall be met with positivity.
(Closing price as of Apr 06, 2022)