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 66 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 34 per cent of the stocks are trading below the 200-DMA. On a weekly basis, we observed that there was a net change of 6 per cent of Nifty stocks falling below their 200-DMA. In the last five trading sessions, Dr Reddy’s Laboratories, HDFC Life Insurance Company, and UltraTech Cement plunged below their 200-DMA while none of Nifty stocks rose above the key indicator. After five weeks of the continuous rally, Nifty witnessed a severe correction as it fell 647 points from its week’s high of 17,992. Last Friday i.e. on August 19, the benchmark index fell short of just eight points from claiming the 18,000 level. Since last Wednesday’s close, it has slipped 340 points or 1.89 per cent. The correction was quite expected as Nifty had seen an over-extended run in a short period. On Friday and then subsequently on Monday, it witnessed a severe fall towards sub 17,400 levels, which was freshly triggered by the fears of US Fed interest rate hikes, recession & tightening of oil supplies.