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 moving averages. The 200-DMA is considered important and one of the basic technical indicators that can be used to determine long-term trend of a security. Among the constituents of Nifty index, 66 per cent of the stocks are trading above their 200-DMAs and 34 per cent stocks are trading below 200-DMAs. In the last four trading sessions, Asian Paints, Coal India, Indusind Bank and Tech Mahindra have closed above their 200-DMAs. On a w-o-w comparison basis, we observed that about 8% of the stocks have managed to close above their 200-DMAs. On May 23, 2019, the index marked all-time high, and during that time, the ratio of stocks trading above/below their 200-DMAs stood at 56:44, where 56 per cent stocks were trading above their 200-DMAs and 44 per cent stocks were trading below their 200-DMAs. On June 03, 2019, the index surpassed its previous high and marked a fresh record high.This time, the ratio was 66:34, where 66 per cent stocks were trading above their 200-DMAs and 34 per cent stocks are trading below their 200-DMAs, which clearly suggests that, along with the upmove in the benchmark index Nifty, the ratio has improved. With this, one interesting fact that comes to notice is that on June 3, 2019, the ratio was 68:32, which is the highest since April 26, 2019. Hence, the current structure of the indicator suggests that the benchmark index is witnessing participation from majority of the stocks and the index may continue its northward journey as the momentum is tilted in favour of the bulls.



Sectoral Sentiment Indicator : This indicator basically interprets the number of stocks in the sectoral indices trading above/below their 200-day moving averages. This will help us to know which of the sectors are improving their performance. After the previous week’s healthy consolidation, the Indian market resumed its upward momentum in the current week and marked a fresh all-time high on Monday. The broad-based buying interest in most of the sectors was seen in the current week also, which helped the benchmark indices to scale higher. On a w-o-w comparison basis, the sectoral index Nifty Financial Services has seen substantial improvement as almost 15 per cent stocks have managed to close above their 200-DMAs, followed by Nifty IT and Nifty Private Bank, both of which saw 10 per cent stocks close above their 200-DMAs, while the Nifty Bank and Nifty PSU Bank saw 8.33 per cent stocks closing above 200-DMAs each and the Nifty Media and Nifty Metal by 6.66 per cent each. On the flip side, the constituents of Nifty FMCG have slipped below their 200-DMAs by 6.66 per cent. The Nifty Auto, Nifty Pharma and Nifty Realty indices remained unchanged on a w-o-w comparison basis. However, among the constituents of Nifty Realty index, almost 90 per cent stocks are trading above their 200-DMAs since last two weeks, while among the constituents of Nifty Auto index, almost 93.75 per cent stocks are trading below their 200-DMAs since last four weeks. The Nifty Auto index has been consolidating in a range and there was no significant development, i.e. no addition or drop was seen in the ratio since last four weeks. However, in the coming weeks, Nifty Auto may be an attention- seeker as contrarian investors may look for opportunity in this sector since much of the slowdown and bad news is now factored into the stock prices. In the upward rally started from May 16, 2019, major participation was seen from Nifty PSU Bank and Nifty Realty as almost 41.67 and 40 per cent stocks have managed to close above their 200-DMAs in the last three weeks, followed by 35 per cent and 24.99 per cent stocks of Nifty Financial Services and Nifty Bank, respectively.



Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, the increasing number of stocks reaching new 52-week highs and fewer stocks reaching new 52-week lows is representative of a bull market, and vice-versa being true of a bear market. On a w-on-w comparison basis, the previous week's ratio was 22:4 and, in the current week, the ratio had been reduced to12:5, where, on an average,12 stocks touched new 52-week highs and 5 stocks hit 52-week lows. On the last two trading sessions of the month May, the average ratio was 10:4 and the average ratio on June 3 and June 4 was 15:5, where on an average 15 stocks touched new 52-week highs and 5 stocks hit 52-week lows, which suggest there is minor improvement in the ratio in the last two trading sessions. However, on a w-on-w comparison basis, the average ratio clearly suggests that the internal strength of the market has been weakened as compared to the last week as the stocks are not participating in large numbers as seen in the previous week.



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