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 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 Nifty 50, the bellwether equity benchmark, are trading below their 200-DMAs, while 44 per cent stocks are trading above their 200-DMAs. In the last five trading sessions. BPCL, Cipla, Dr Reddy's, HCL Tech and Hindustan Unilever have managed to close below their 200-DMAs. On a w-o-w comparison basis, we observed that about 10% of the stocks have managed to close below their 200-DMAs. Despite the index losing almost 2.73 per cent since July 15, the current ratio is little bit better than that on July 15, where we have seen the ratio of stock trading above/below 200-DMA stood at 42:58, where 42 per cent stocks were trading above their 200-DMAs and 58 per cent stocks were trading below their 200-DMAs. Currently, the ratio stands at 44:56, where 44 per cent stocks are trading above their 200-DMAs and 56 per cent stocks are trading below 200-DMAs. The sell-off in the recent week was disheartening because marquee and stable propositions like the HDFC twins also finally succumbed to the selling spree in the stock markets. In the last one week, HDFC and HDFC Bank were trading above 200-DMA by about average of 11.39 per cent, but in the current week, we have seen average cool-off by 4.81 per cent and this has helped the market to extend its southward journey. 



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, as across-the-board selling in most of the sectors dragged the Nifty index to a two-month low on Wednesday. On a w-o-w comparison basis, the sectoral index Nifty PSU Bank has seen substantial decline as 25 per cent stocks have managed to close below their 200-DMAs. In the current fall that started from July 5, this sector has been the main pain point as almost 66.67 per cent constituents have managed to close below their 200-DMAs in the last three weeks and, as a result, the sector itself fell below its 200-DMA. The Nifty PSU Bank was followed by Nifty Pharma with 20 per cent declining stocks and Nifty Financial Services and Nifty IT with 10 per cent each. The Nifty Bank declined by 8.33 per cent and the Nifty FMCG and Nifty Metal saw a marginal dip by 6.67 per cent each. The Nifty Auto, Nifty Media, Nifty Private Bank and Nifty Realty indices remained unchanged on a w-o-w comparison. In the last five trading sessions, the financial sector has been the biggest culprit as the stocks of Nifty Bank on an average fell by 9.77 per cent, followed by Nifty PSU bank by 9 per cent, Nifty Private Bank by 8.77 per cent and Nifty Financial Services by 8.32 per cent. The Nifty Auto is truly in pain as all the stocks are trading below their 200-DMAs since last three weeks and, in the current week, on an average the stocks fell further by 7 per cent. The current structure of the sectoral sentiment indicator clearly indicates that the Indian market is witnessing broad-based participation in the current fall and, going ahead, it is important to observe how financial stocks perform as these could decide the fate of the market in the coming weeks. 



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 3:22, but in the current week, the ratio has deteriorated further for the third consecutive week to 3:59, where on an average, three stocks touched new 52-week highs and 59 stocks hit 52-week lows. With this, in the current week, the average number of stocks making 52-week low was higher since January 2019. On Monday, the index slumped to two-month low, and at that time, almost 17 per cent stocks from Nifty 500 space marked new 52-week lows. Going ahead, it will be interesting to watch the behaviour of the index in the coming week, as the ratio has followed pattern of not staying in favour of the bears for more than three consecutive weeks since January 2019. In the current context, three weeks in the favour of the bears are already behind us. Also, in the last two trading sessions, despite the index making new low, the ratio of stocks making 52-week low was not able to cross the figure of Monday. Hence, in the coming week, it will be no surprise if we see the index stalling its momentum and sliding into a period of meaningful consolidation.