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 66 per cent stocks that constitute the Nifty 50, the bellwether equity benchmark, are trading below their 200-DMAs, while 34 per cent stocks are trading above their 200-DMAs. In the last five trading sessions, Axis Bank, Grasim, IOC, NTPC and Reliance have managed to close below their 200-DMAs. For the first time since January 2017, Reliance Industries has managed to close below its 200-DMA and since October 2018 Axis Bank 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 below their 200-DMAs. On June 3, 2019, the index marked a fresh record high and, during that time, the ratio of stocks 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 almost 34 per cent stocks have managed to close below their 200-DMAs and, as a result, the index itself has slipped below its 200-DMA for the first time after March 2019. Also, one interesting observation is that the stock trading below its 200-DMA marks its highest level for CY2019 as almost 66 per cent stocks from Nifty 50 space are trading below their 200-DMAs. Hence, the current structure of the indicator is pointing to intensifying bearish sentiment going ahead. 



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 Nifty index has witnessed the worst July in 17 years. The worries on economic growth, disappointing budget proposals and earnings have weighed heavily on the Indian markets and all these factors led to the market slipping below 5-month low. This is clearly visible in the sectoral sentiment indicator, with bulk of the components of the sectors having managed to close below their 200-DMAs since last four weeks. The Nifty Realty sector, which is consistently outperforming the market since May 2019, has finally seen substantial decline on a w-o-w comparison basis as 20 per cent of the stocks have managed to close below their 200DMA. Among the constituents of Nifty Realty sector, last week, the stocks were trading above their 200-DMAs by an average of about 9.42 per cent, but in the current week, we have seen the average cool off by 5.65 per cent. Among the financials, the Nifty Private Bank saw addition of 10 per cent and Nifty Bank about 8.34 components slipping below the cru cial 200-DMA. The Nifty Media and Nifty Financial Services saw their components slipping by 6.67 per cent and 5 per cent, respectively. The Nifty Auto, Nifty FMCG, Nifty IT, Nifty Pharma and Nifty PSU Bank indices remained unchanged on a w-o-w comparison. The main pain point of current fall, the Nifty PSU Bank index, has remained unchanged on a w-o-w comparison basis, but last week, the stocks were trading below their 200-DMAs by about average of 13.06 per cent. However, in the current week, we have seen further correction in stocks by an average of 5.1 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 3:59, but in the current week, the ratio has declined further for the fourth consecutive week towards a bearish side 2:82, where on an average, two stocks touched new 52-week highs and 82 stocks hit 52-week lows. On July 31, 2019, the index slumped to five-month low. At that time, almost 24 per cent stocks from Nifty 500 space marked new 52-week lows, which is highest in CY2019. On July 25, July 26 and July 27, the average ratio was 3:56, where an average of three stocks had touched 52-week high and 56 stocks had touched 52-week low, but in last two trading sessions, we have seen significant addition in the number of stocks making 52-week low to 1:120 where average one stock had touched new 52-week high and 120 stocks had touched new 52-week lows. This clearly suggests that the internal strength of the market had drastically weakened in the last two trading sessions. The current structure of the indicator clearly indicates that we are seriously in the grip of the bears.
    


 (Closing price as of July 31, 2019)