Sentiment Indicators

200-DMA INDICATOR: This indicator is a measure of the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving average. The 200-DMA is considered as an important and one of the basic trend following indicators that can be used to determine long-term trend of a security. Almost 66 per cent stocks that constitute the Nifty50, the bellwether equity benchmark, are trading above 200-DMA, while 34 per cent stocks are trading below their 200-DMA. There has been uninterrupted improvement in the ratio of stocks trading above its 200-DMA since the last week of February. On a week-on-week comparison basis, we observed that the indicator marked a high of 68 per cent and on Wednesday we witnessed reversal from that level as 2% of the stocks slipped below their 200-DMA due to severe fall from the higher levels in the index. The continuous improvement in the ratio is halted on w-o-w basis, which clearly indicates that the upward momentum is likely to take pause in the upcoming days.



Sectoral Sentiment Indicator : This indicator basically interprets the number of stocks in the sectoral indices trading above/below their 200- day moving average. This will help us to know which of the sectors are improving their performance. According to the sectoral sentiment indicator, the Bank Nifty, Nifty Private Bank, Nifty PSU Bank are extremely overstretched at the moment as more than 80 per cent of the stocks are trading above their 200-DMA and the prices of majority of the stocks are trading way above their 200-DMAs, so we expect the above indices may stall their momentum and may witness sideways action. On the flip side, the Nifty Auto is in extremely oversold zone as 93.75 per cent constituent stocks are trading below their 200-DMAs. The Nifty Pharma index is at the neutral level as the constituents of this sector are trading at 1:1 ratio, that is, 50 per cent stocks are trading above their 200-DMAs, while 50 per cent stocks are trading below their 200-DMAs.



Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, increasing number of stocks reaching new 52-week highs and fewer stocks reaching new 52-week lows is symbolic of a bull market, and vice-versa being true of a bear market. Considering the below chart, it clearly indicates that for the last five trading sessions, an average of 14 stocks are marking fresh 52-week highs, while about three stocks are marking new 52-week lows. On March 29 and April 1, 2019, we saw the highest number of stocks hitting 52-week highs in the last five trading sessions. The ratio on March 29 was 22:1, where 22 stocks registered a new 52-week highs and only one stock registered 52-week low. On April 1, this ratio was 20:1, where 20 stocks touched 52-week highs and only one stock hit 52-week low. Thereafter, the number of stocks hitting 52-week high did not see any significant improvement and the ratio turned 8:3 and 12:4 as on April 2 & 3, 2019, respectively. This clearly indicates that stocks are not participating as much as was seen on March 29 and April 1.



*LEGEND:
DMA - Daily Moving Average. 
MACD - Moving Average Convergence Divergence 
RMI - Relative Momentum Index 
ROC - Rate of Change 
RSI - Relative Strength Index