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 36 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 64 per cent of the stocks are trading below the 200-DMA. On a weekly basis, we observed that there was a net change of 4 per cent of Nifty stocks rising above their 200-DMA, which is a positive sign. In the last five trading sessions, Adani Ports, Nestle, and Tata Motors surged above their 200-DMA while Power Grid Corporation plunged below its key indicator. Since Wednesday (July 13), Nifty 50 index witnessed a fantastic one-way rally. In the last five trading sessions, the benchmark index surged 554 points or 3.46 per cent. Interestingly, many factors contributed to this positivity, which includes FIIs becoming net buyers for three consecutive days. Moreover, some US companies posted good results, which boosted global sentiments. Also, the Government of India’s decision to cut the additional windfall tax on oil exports led to a strong short-covering rally. Overall, we saw good sentiment in every sector this week, which boosted confidence among the bulls. With such a strong recovery, the difference between index closing and 200-DMA now stands at negative 3.16 per cent, which was negative 6 per cent in the previous week. Now that the stocks are gaining momentum, we can expect the index to scale to further highs in the times to come.

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. It was a good week for the sectoral indices as most of them ended positively on a WoW basis. Among the sectoral indices, Nifty Auto and Nifty FMCG are currently above their 200-DMA with Nifty PSU Bank being the latest entrant to the list. On a WoW comparison basis, Nifty Realty saw a maximum of about 30 per cent of its constituents surging above the 200-DMA. Meanwhile, Nifty FMCG witnessed about 13.33 per cent of its constituents rising above the key indicator. Almost 10 per cent of the constituents of Nifty Financial Services and Nifty Private Bank too rose above their 200-DMA. Also, Nifty Auto and Nifty Metal saw this number to be at 6.67 per cent each. Meanwhile, Nifty Bank, Nifty IT, Nifty Media, Nifty Pharma, and Nifty PSU Bank saw no change in their constituents crossing above/below the key indicator. This week, all the sectoral indices closed positively on a WoW basis. The broader market rally wasmainly led by the financials (banks), FMCG, and IT. Banks continued to dominate this week while the IT sector witnessed a good bounce from its oversold region. Meanwhile, pharma and media underperformed other sectors. They closed marginally higher but were unable to gain momentum despite positive sentiment in the market. Thus, these sectors need to build a strong strength to show a good uptrend. 

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, suggests a bear market. On a WoW comparison basis, the average ratio of stocks marking a fresh 52-week high/low last week was 6:2 while this week, the ratio stood at 8:3. On a WoW basis, on average, eight stocks hit their fresh 52-week high whereas on the flip side, on average, about three stocks have touched new 52-week lows. The broader market traded higher amid volatility. Interestingly, Nifty 500 index opened lower on two occasions but was able to close above the previous day’s high. Also, the broader index rose above its previous week’s high, which is a positive sign. Such strong strength was proved correct by the average number of stocks hitting a 52-week high this week as the number rose to 8 from 6. Moreover, in the last three trading sessions, no stock from Nifty 500 universe hit its 52-week low, which adds to the positive sentiment. Considering the situation, we can say that the scenario is far better than what we had seen about three weeks ago. The index has been on a continuous rise, supported by the improving internal strength of the market. In the coming week, the focus must be on the average number of stocks hitting a fresh 52-week high as any increase in this number shall only propel the index further.