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 54 per cent stocks that constitute the Nifty 50, the bellwether equity benchmark, are trading above their 200-DMAs, while 46 per cent stocks are trading below their 200-DMAs. In the last five trading sessions, Asian Paints, BPCL, Cipla, Dr Reddy's, HCL Tech and Hindustan Unilever have managed to close above their 200-DMAs, while on the flip side, Wipro has managed to close below its 200-DMA. On a w-o-w comparison basis, we observed that about 10% of the stocks have managed to close above their 200-DMAs. The Indian market has witnessed range-bound action in the current week and this is clearly visible in the 200-DMA indicator because since July 5, the ratio is oscillating between the bulls and the bears. We believe stock-specific action would continue amid consolidation in Nifty 50 index as we sail through Q1FY20 earnings season.


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 stock market is consolidating in a range as individual stock picking and dumping is underway and this is clearly visible in the sectoral sentiment indicator as some pockets have seen addition in stocks that have moved above their 200-DMAs, while some have seen addition in stocks that have moved below 200-DMAs. On a w-o-w comparison basis, the sectoral indices Nifty FMCG and Nifty Pharma have seen substantial improvement as the stocks with an addition of 20 per cent each have managed to close above their 200-DMAs, followed by Nifty Financial Services which has seen addition of 5 per cent. On the flip side, the constituents of Nifty Private Bank and Nifty Bank have slipped below their 200-DMAs by 10 per cent and 8.33 per cent, respectively. The Nifty Media index has seen minor dip in the stocks, as the stocks trading below their 200-DMAs fell to 86.66 per cent from 80 per cent last week. The Nifty Auto, Nifty IT, Nifty Metal, Nifty PSU Bank and Nifty Realty remain unchanged on a w-o-w comparison. The Nifty Bank and Nifty Private Bank are consistently witnessing new addition in stocks that are trading below their 200-DMAs since last two weeks. On a cumulative basis, almost 25 per cent and 20 per cent constituents of Nifty Bank and Nifty Private Bank, respectively, have managed to close below their 200-DMAs in the last two weeks. Among the constituents of Nifty Pharma, almost 70 per cent stocks are trading below their 200-DMAs. However, one interesting fact that came to notice was that last week the Nifty Pharma stocks were trading below their 200DMAs by about average of 13.12 per cent, but in the current week, we have seen the average rebound by 3.32 per cent. 


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 9:22 and, in the current week, the ratio was 3:22, where on an average three stocks touched new 52-week highs and 22 stocks hit 52-week lows. In the current week, the ratio of stocks that touched new 52-week low remained the same as in the previous week, but we have seen significant decline in the stocks that touched new 52-week highs. One interesting fact that comes to notice is that the index has witnessed upward momentum in the current week despite the fact that the average number of stocks making 52-week high was lowest since February 2019. This clearly indicates that most of the stocks are not participating in the upward rally.