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 56 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 44 per cent of the stocks are trading below the 200-DMA. On a weekly basis, we observed that 12 per cent of the stocks of Nifty have plunged below their 200- DMA. In the last five trading sessions, Bajaj Finserv, HCL Technologies, HDFC Bank, L&T, Maruti Suzuki India, and Tech Mahindra have plunged below their 200-DMA while none of the Nifty stocks crossed above the 200-DMA. Since last Wednesday’s close, Nifty lost about 332 points or 1.86 per cent.

Throughout the week, the benchmark index remained weak as it closed negatively in four out of the five trading ses- sions. The 17,600-level, which acted as strong support during the week, was decisively broken on Tuesday and Nifty closed below the 17,500-mark on the day of the expiry. On the tech- nical chart, it formed a bearish candle and closed nearly at the day’s low, which is a sign of weakness. However, it managed to close just above its 20-DMA, which lies at 17,470. During the week, the number of stocks falling below their 200-DMA kept on increasing. With this, the difference between the index close and 200-DMA has decreased and currently, stands at 1.84 per cent, which was 4.07 per cent last week. Thus, with an increase in the number of stocks falling below the key indi- cator, we found that the difference between the index close and 200-DMA has drastically reduced. Going into the next week, any increase in the number of stocks plunging below their key indicator would be worrisome for the investors

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. Among the sectoral indices, Nifty Pharma, Nifty IT, Nifty Auto, Nifty Financial Services, and Nifty Pharma are trading below their 200-DMA. On a WoW comparison basis, Nifty IT saw a maximum of about 20 per cent of its constituents plunging below their 200-DMA. Nifty FMCG saw this number to be at 13.33 per cent. It was followed by Nifty Private Bank, which saw about 10 per cent of its constituents falling below the key indicator.

Similarly, Nifty Bank & Nifty Financial Services saw about 8.33 per cent and 5 per cent of their constituents slipping below the indicator, respectively. Meanwhile, Nifty Auto, Nifty Media, Nifty Metal, Nifty Pharma, Nifty PSU Bank, and Nifty Realty saw no change in their constituents crossing above/below the key indicator. Nifty FMCG emerged as the top performer among the sectoral indices. During the week, the index rose about 1.61 per cent and also, surged above its 200-DMA. This defensive sector has proved to be a boon for investors during jittery times and the index is expected to continue the strong upside next week. On the other hand, Nifty IT fell below its 200-DMA and lost over 4 per cent during the week. As discussed last week, the index is likely to face severe selling pressure due to global inflation fears. The index has fallen in all the five trading sessions and is expected to remain weak for the next week.

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 19:3 while this week, the ratio stood at 19:0, where, on average, 19 stocks touched a new 52-week high. On the flip side, on average, zero stocks have hit a new 52-week low. Since last Wednesday’s close, Nifty 500 index has slipped about 189 points or 1.23 per cent.

During the week, the broader index traded with huge volatility and filled the gap it had created last Monday. Interestingly, the broader index didn’t see much selling pressure as Nifty did. The mid-cap and small-cap stocks have been resilient to market fluctuations, which can be reflected in the index. Thus, the index did not record any stock hitting its 52-week low during the week. However, the number of stocks hitting their 52-week high also did not increase. This shows a consolidation mode in the index. Thus, the index is expected to remain jittery next week and trade with huge vol- atility. However, a significant rise in any of the 52-week high/ low numbers shall be keenly watched.

(Closing price as of Apr 13, 2022)