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 technical indicators that can be used to determine long-term trend of a security. Almost 58 per cent stocks that constitute the Nifty50, the bellwether equity benchmark, are trading above their 200-DMAs, while 42 per cent stocks are trading below their 200-DMAs. On a w-o-w comparison basis, there is no significant development seen as the ratio remains unchanged. On June 3, 2019, the index has marked a fresh record high and, during that time, the ratio of stock trading above/below 200-DMA stood at 68:32, where 68 per cent stocks were trading above their 200-DMAs and 32 per cent stocks were trading below their 200-DMAs. Since then, we have seen that almost 10 per cent stocks have managed to close below their 200-DMAs, but since last four trading sessions, the ratio remain flat to 58:42, where 58 per cent stocks are trading above their 200DMAs and 42 per cent stocks are trading below 200-DMAs, while the index has lost almost 1.87 per cent. This clearly indicates that some overheated counters are reverting to their mean. Indicator 


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. The Indian market continued its losing streak in the current week also, and this downward rally was not only quantitative in nature but also qualitative, as bulk of the components of the sectors have managed to close below their 200-DMAs. To begin with, on a w-o-w comparison basis, as many as 16.67 per cent of the stock components of the Nifty Bank and Nifty PSU bank each have managed to close below their 200-DMAs, followed by Nifty FMCG where 13.33 per cent components slipped below their crucial 200-DMAs. Among Nifty Financial Services, Nifty IT and Nifty Realty, about 10 per cent of the stock constituents had moved below 200-DMA. The Nifty Metal index has seen minor dip in the stocks, as the stocks trading below their 200-DMAs increased to 80 per cent from 73.33 per cent last week. On a w-on-w comparison basis, not a single sectoral index has seen addition of stock trading above its 200-DMA, which clearly suggests that we are witnessing broad-based sell-off in the recent correction. The Nifty Auto, Nifty Media, Nifty Pharma and Nifty Private Bank remain unchanged on a w-o-w comparison. In the downward rally that started from June 4, 2019, major participation was seen from financial sector as among the constituents of Nifty PSU Bank and Nifty Bank, 41.67 per cent and 33 per cent stocks have managed to close below their 200-DMAs in the last two weeks, followed by 25 per cent stocks of Nifty Financial Services. 


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-o-w comparison basis, the previous week's ratio was 7:11 and, in the current week, we have seen the average ratio notably inclined in favour of stocks declining to 52-week lows to 3:36, wherein, an average three stocks touched new 52-week highs, while 36 stocks hit 52-week lows. One interesting fact that came to notice was that in the current week, the average number of stocks making 52-week lows was higher since February 2019. This clearly indicates that, in the current week, the overall health of the market is weakening significantly and there is broad participation in the downmove. Considering the significant additions in the stocks making 52-week lows, it clearly indicates that stocks which have burden of debt or some corporate governance issues are being hammered, whereas the quality stocks are in flavour.