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. For the first time since May 15, 2019, the ratio has turned in favour of the bears as, among the constituents of Nifty index, 56 per cent stocks are trading below their 200-DMAs and 44 per cent stocks are trading above 200-DMAs. In the last five trading sessions, Bajaj Auto, BPCL, Coal India, HCL Tech, Hindustan Unilever and ONGC have managed to close below their 200DMAs. On a w-o-w comparison basis, we observed that about 12% of the stocks have managed to close below their 200-DMAs. We had predicted in the last report that Bajaj Finance, Bajaj Finsv and Titan may stall their momentum and slide into a period of consolidation and, accordingly, we have seen on an average 12.58 per cent cool-off in the abovementioned stocks. The current structure of the indicator is suggesting the benchmark index is witnessing participation from majority of the stocks and the index may continue its southward journey as the momentum is tilted in favour of the bears.



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 current week was undoubtedly dominated by the bears as the weak global cues and reaction to certain provisions of the Union budget weighed heavily on the Indian market. It is clearly reflected in the sectoral sentiment indicator, with bulk of the components of the sectors having managed to close below their 200-DMAs. To begin with, on a w-o-w comparison basis, as many as 41.67 per cent of the stock components of the Nifty PSU Bank have managed to close below their 200-DMAs, followed by Nifty Bank where 16.67 per cent and about 13.33 per cent in the Nifty FMCG have witnessed components slipping below the crucial 200-DMA. Among Nifty IT and Nifty Private Bank, about 10 per cent of the stock constituents had moved below 200-DMA and 6.25 per cent and 6.66 per cent components of Nifty Auto and Nifty Metal, respectively, have moved below 200-DMA. The Nifty Financial Services, Nifty Media, Nifty Pharma and Nifty Realty indices remained unchanged on a w-o-w comparison. In the coming weeks, it will be interesting to watch the behaviour of Nifty Auto’s constituents as all the stocks are trading below their 200-day EMA (on an average 13.71 per cent below 200-DMA). The current structure of the Sectoral Sentiment Indicator clearly indicates that the ratio of majority of sectors is tilted in favour of the bears. In the coming week, Q1FY20 earnings will play a crucial role as it would be interesting to see whether it helps to improve the market sentiments or deteriorate it further.



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 19:10, but in the current week, the ratio has declined and skewed towards the bearish side 9:22, where on an average, nine stocks touched new 52-week highs and 22 stocks hit 52-week lows. On Monday, we have seen the ratio has turned in favour of the bears for the first time since June 26. With this, the average number of stocks making 52-week low was higher since last three weeks. In the last three trading sessions, we have seen significant addition in the number of stocks making 52-week lows, while on an average, only one stock has managed to touch its 52-week high. This clearly suggests that the internal strength of the market had drastically weakened in the last three trading sessions and the bears have tightened their grip. 




 (Closing price as of July 10, 2019)