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 there was a net change of 2 per cent of Nifty stocks rising above their 200-DMA. In the last five trading sessions, only one stock, i.e., Zee Entertainment Enterprises Limited rose above its 200-DMA while none of Nifty 50 stocks plunged below the key indicator. After a consolidatory week, NSE Nifty 50 index traded higher against the global trend and rose 379 points or 2.15 per cent in the last five trading sessions. As we stated in the previous Flash News that Indian indices are showing resilient behaviour, the same phenomenon was witnessed this time too. Global cues dented bullish sentiment at the beginning of Wednesday’s trading session but strong buying at lower levels led Nifty to recover nearly all its pre-opening losses. Despite local & global inflation worries, Nifty 50 continued to march higher and crossed the 18,000 level. A sharp rise in essential items like food and house rent in the US pushed inflation higher despite falling crude oil prices.

This is likely an indication of an aggressive interest rate hike by Fed. Nevertheless, the local conditions do not seem as severe as the global cues. Meanwhile, the financials continued their dominance and stocks like ICICI Bank and SBI hit their respective fresh 52-week highs. Amidst the volatility, the difference between Nifty’s close and 200-DMA is currently 5.71 per cent, which was 3.89 per cent, a week ago. Majorly, the global cues shall be in focus next week and volatility is expected to persist. The stock-specific approach remains the key for next week too while a collective effort from the stocks is needed to push Nifty above the 18,000 level.