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 averages. The 200-DMA is considered important and one of the basic technical indicators that can be used to determine long-term trend of a security. For the first time, since the month of February 2019, the ratio has turned in favour of the bears as, among the constituents of Nifty index, 54 per cent stocks are trading below their 200-DMAs and 46 per cent stocks are trading above 200-DMAs.In the last five trading sessions, Adani Ports, Asian Paints, IOC, LT, NTPC and Power Grid have closed below their 200-DMAs, while on the flip side, Bharti Airtel has managed to close above the 200-DMA. On a w-o-w comparison basis, we observed that about 10% of the stocks have closed below their 200-DMAs. The uncertainty over the election results is clearly visible in the indicator as the ratio was seen oscillating in a range in the last five trading sessions. 

However, the data as on Wednesday reflected almost 54 per cent stocks from Nifty 50 were trading below their 200-DMAs, which clearly indicates that the pessimism is on the rise and the bears have upper hand over the bulls ahead of the major event outcome.

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 benchmark indices to a twomonth low on Wednesday. On a w-o-w comparison basis, the sectoral index Nifty Pharma has seen substantial decline as 20 per cent stocks have managed to close below their 200-DMAs. The pharma stocks clearly reacted on a US lawsuit which accuses pharma firms of conspiring to hold generic drug prices higher in the US.The Nifty Pharma was followed by Nifty Financial Services, Nifty Private Bank and Nifty Realty, which dropped by 10 per cent each. The Nifty Bank and Nifty PSU Bank declined by 8.33 per cent each and the Nifty Media fell 6.67 per cent. 

The Nifty Auto, Nifty FMCG, Nifty IT and Nifty Metal indices remained unchanged on a w-o-w comparison basis. Among the constituents of Nifty Media, almost 86.66 per cent stocks traded below their 200-DMAs (about average 26% below its 200-DMA) which looks extremely oversold, while in the Nifty Auto and Nifty Metal,almost 93.33 per cent stocks were seen trading below their 200-DMAs. Among the constituents of Nifty Realty, the number of stocks trading above/below its 200- DMA was at 50:50 ratio. 

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 7:8 and, in the current week, we have seen the average ratio notably inclined in favour of stocks declining to 52-week lows to 1:22 for the second consecutive week, where on an average, one stock touched new 52-week high while 22 stocks hit 52-week lows. 

This clearly indicates that in the current week, the overall health of the market is weakening significantly. On Tuesday, the index slumped to two-month low, at which time almost 10 per cent stocks from Nifty 500 marked new 52-week lows. However, as compared to the last seven trading sessions, on Wednesday we saw a marginal improvement in the stocks that touched new 52-week highs to seven, where on an average, one stock was making new 52-week high in the last seven trading sessions. In the coming sessions, we have to watch whether this marginal improvement in the ratio was due to a pullback or we are nearing a bottom on a short term basis. Going ahead, the uncertainty is likely to remain ahead of the election results scheduled to be declared on May 23, 2019.

*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 May 15, 2019)