Sentiment Indicator

200-DMA INDICATOR: This indicator is a measure of the percentage of Nifty 50 stocks that are trading above/below their 200-day moving average. The 200-DMA is considered important and one of the basic technical indicators that can be used to determine the long-term trend of a security. Among the constituents of Nifty index, 62 per cent stocks are trading above their 200-DMA and 38 per cent stocks are trading below 200-DMA. In the last three trading sessions, Bharti Infratel, Coal India, Indusind Bank and Power Grid have closed below their 200-DMAs, while on the flip side, BPCL and Gail have managed to close above their 200-DMAs. On a w-o-w comparison basis, we observed that about 4% of the stocks have closed below their 200-DMAs. The current ratio of 62:38 is lowest in the month of April 2019 and the ratio is consistently making lower lows since April 16, 2019. From April 16, 2019, almost 12 per cent stocks have managed to close below their 200-DMAs. 

This current structure of the indicator is clearly suggesting the benchmark index is likely to witness consolidation with some negative bias in the upcoming days.

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. On a w-o-w comparison basis, the sectoral index Nifty Private Bank has seen substantial decline as 20 per cent of the stocks have managed to close below their 200-DMAs, followed by Nifty PSU Bank by 16.67 per cent and Nifty Bank by 16.66 per cent. The Nifty Pharma and Nifty Metal saw a marginal dip by 10 per cent and 6.66 per cent, respectively. The Nifty Auto, Nifty Financial Services, Nifty FMCG, Nifty IT and Nifty Realty indices remained unchanged on a w-o-w comparison. On a w-on-w comparison basis, not a single sectoral index has seen improvement, which clearly suggests that we are witnessing range-bound consolidation and none of the sectors are taking the charge. The Nifty Auto index is truly in pain as 87.5 per cent constituents are trading below their 200-DMAs. 

The decline was seen on account of weak demand and disappointing earnings by some of the auto majors.

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 6:4 and, in the current week, we have seen marginal improvement to 11:6, where on an average eleven stocks touched new 52-week highs and six stocks hit 52-week lows. The average improvement in the ratio to 11:6 was mainly due to April 25 session, where we saw 15 stocks touching 52-week high. On the last trading session of the month of April, the ratio turned negative to 10:11, where on an average, 10 stocks touched new 52-week highs and 11 stocks had touched new 52-week lows. One interesting fact that came to notice was that on Tuesday, the number of stocks making 52-week lows was higher since February 2019. 

This indicates that buying is being seen in the selected stocks ahead of major event outcome, while the sell-off continues in the stocks which are not on the buying radar of the market participants.

*LEGEND:
DMA - Daily Moving Average.
MACD - Moving Average Convergence Divergence
RMI - Relative Momentum Index
ROC - Rate of Change 
RSI - Relative Strength Index
(Closing price as of Apr 30, 2019)