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 68 per cent stocks that constitute the Nifty 50 are trading below their 200-DMAs, while 32 per cent stocks are trading above their 200-DMAs. From August 5 to August 9, 2019, the index has witnessed pullback of 3.69 per cent and this is clearly visible in 200-DMA indicator as on a w-o-w comparison basis, we observed that almost 8% of the stocks have managed to close above their 200-DMAs. In the last three trading sessions, HCL Tech, HDFC Bank, Reliance Industries and Titan have managed to close above their 200-DMAs. On a w-o-w comparison basis, the index bellwether Reliance Industries was trading below its 200-DMA by 11.15 per cent in the last week, but in the current week, the stock has witnessed a strong jump of 14.33 per cent from lower levels and currently it is trading above its 200-DMA by about 3 per cent. Along with Reliance Industries, private sector bank major HDFC Bank also aided the gains during the sharp pullback witnessed on Thursday and Friday. This clearly suggests that the current rally may be termed as just a relief rally based on short-covering.



Sectoral Sentiment Indicator:
This indicator basically interprets the number of stocks in the sectoral indices trading above/below their 200-day moving averages. This indicator helps us to know which of the sectors are improving their performance. In the last three trading sessions, Indian market has witnessed a pullback rally followed by the biggest single day fall in a month on Tuesday and this is clearly visible in the sectoral sentiment indicators as some of the pockets had seen some addition to the stocks trading above their 200-DMAs and some have seen addition in stocks trading below their 200-DMA. On a w-o-w comparison basis, the sectoral index Nifty IT has seen substantial improvement as 20 per cent stocks have managed to close above their 200DMAs, followed by Nifty Private Bank by 10 per cent and Nifty Bank by 8.34 per cent. The Nifty Media has saw a marginal improvement as 6.67 per cent stocks have managed to close above their 200-DMAs. On the flip side, among the constituents of Nifty Pharma and Nifty PSU Bank, almost 10 per cent and 8.33 per cent, respectively, have managed to close below their 200-DMAs. The Nifty Auto, Nifty Financial Services, Nifty FMCG, Nifty Metal and Nifty Realty indices remained unchanged on a w-o-w comparison. Among the constituents of Nifty Auto, Nifty Metal, Nifty Pharma and Nifty PSU Bank, all the stocks are trading below their 200-DMA. Going ahead, the current structure of the sectoral sentiment indicator clearly indicates that the ratio of majority of sectors is tilted in favour of bears.



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 3:77 and, in the current week, the ratio was 5:38, where on an average, five stocks touched new 52-week highs and 38 stocks hit 52-week lows. Since the low of August 5, 2019, the index has witnessed almost 3.85 per cent bounce and, due to that, we have seen a marginal pause in the stocks making new 52-week lows. On Wednesday, the index witnessed the steepest single day fall in the month of August 2019, and with this, we have seen the addition in stocks making 52-week low. On August 8 and August 9, the average ratio was 5:32, where an average of five stocks had touched 52-week highs and 32 stocks had touched 52-week lows, but on Wednesday we have seen significant addition in the number of stocks making 52-week lows as 5:50, where an average of five stocks had touched new 52-week highs and 50 stocks touched new 52-week lows. The pullback rally from the lower levels did help markets to recoup some of its losses, but on the stock-specific front, the pain continued. This clearly suggests that the market participants are clearly lacking confidence and only selected counters are seeing buying interest.