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 averages. 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 56 per cent stocks that constitute the Nifty50, the bellwether equity benchmark, are trading above their 200-DMAs, while 44 per cent stocks are trading below their 200DMAs. In the last five trading sessions, Asian Paints has managed to close below its 200-DMA. On a w-o-w comparison basis, we observed that only 2% of the stocks have managed to close below their 200-DMAs. The current ratio of 56:44 is lowest since May 23, 2019. The investors’ sentiments before the Union budget has historically been strong, but this time these didnot mirror in the 200-DMA indicators as the ratio remained almost flat since last two weeks. This clearly indicates the indecisiveness among the investors ahead of the Union budget.
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 has witnessed range-bound action in the last five trading sessions, and this is clearly visible in the sectoral sentiment indicators. Among the eleven sectors, almost five sectors have remained unchanged on a week-on-week comparison basis. The financial sector has seen some relief rally in the current week after two weeks of weakness. On a w-o-w comparison basis, as many as 25 per cent of the stock components of the Nifty PSU Bank have managed to close above their 200-DMAs, followed by Nifty Bank where 16.67 per cent and about 10 per cent in the Nifty Realty have witnessed components surging above their crucial 200-DMAs, while 6.66 per cent stocks of Nifty Metal and 5 per cent of Nifty Financial Services have surged above their 200-DMAs. On the flip side, the 6.67 per cent constituents of Nifty FMCG have slipped below their 200-DMAs. The Nifty Auto, Nifty IT, Nifty Media, Nifty Pharma and Nifty Private Bank have remain unchanged on a w-o-w comparison. At the moment, in the Nifty Realty space, the number of stocks trending above/below their 200-DMAs is only at 90:10 ratio, which clearly suggests that the index is in an uptrend. On the flip side, Nifty Auto and Nifty Pharma were two pockets where 93.75 per cent and 90 per cent, respectively, of the 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, the increasing number of stocks reaching new 52-week high and fewer stocks reaching new 52-week low 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 3:36 and, in the current week, the ratio was 5:20, where on an average 5 stocks touched new 52-week high and 20 stocks hit 52-week low. On Wednesday, the number of stocks making 52-week high was higher since June 4, 2019. With this, the ratio was seen at 12:12, where 12 stocks touched new 52-week high and 12 stocks hit 52-week low. This clearly suggests that the internal strength of the market has marginally improved as compared to the last week as the stocks are not participating in the stocks making 52-week lows in large numbers was seen in the previous week. However, in the coming sessions, we have to watch whether this marginal improvement in the ratio was due to a pullback or we are nearing a bottom on a short term basis.
