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 90 per cent of the stocks that constitute the Nifty 50 equity benchmark index are trading above their 200-DMAs while 10 per cent of the stocks are trading below the 200-DMAs which was at the same level in the prior week. During the first expiry trading session of August, the Nifty experienced a decline of nearly 145 points, closing below the key psychological support level of 19,500. However, the Nifty rebounded by 250 points from this closing level in next 4 days, securing a close above 19,500 once again. The trading session on Wednesday saw notable volatility, witnessing an early drop of 90 points, which was subsequently entirely recovered, leading to a rally of 60 points and a closing level of 19,632.55. A decisive move above the 19,650 level is likely to spark renewed buying interest. At present, there exists a positive gap between the Nifty's closing value (19,632.55) and its 200-day moving average (18,261.50). The index has effectively maintained its position above the 200-day moving average, marking a difference of approximately 7.5 per cent as opposed to the 7.25 per cent variation observed just a week prior. This recent 0.25 per cent increase can be attributed to the robust recovery observed since the previous Friday. Given the current scenario, traders are advised to exercise caution with narrow stop losses, considering the potential for volatility. The recent substantial correction can serve as a viable trading stop loss reference point for the upcoming week.