Sentiment Indicators

200-DMA INDICATOR:
This indicator measures the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving averages. The 200-DMA is considered important as it is one of the basic technical indicators that can be used to determine the long-term trend of security. Almost 88 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 12 per cent of the stocks are trading below their 200-DMAs. In the last five trading sessions, Eicher Motors has surged above its crucial 200-DMA. On a WoW comparison basis, we observed that 2 per cent of the stocks have surged above their 200-DMAs. In the last five trading sessions, Nifty index has gained 78.65 points or 0.53 per cent.

However, the index is still trading in a defined range of 14,984-14,151 level. On Monday, the index had touched the upper level of the range but it did not sustain at higher levels and again, witnessed correction. The indicator structure has almost remained unchanged as we have not seen any significant changes in the last five trading sessions. The difference between 200-DMA and the closing of the index has contracted further. In the previous week, the difference between 200-DMA and the index close was 11.37 per cent while currently, the difference is 11.11 per cent. Considering the current structure of the indicator, the index is likely to con-solidate in the range of 14,984-14,151 while the stock-specific action is likely to continue. 

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 sectors are improv-ing their performance. Currently, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT and Nifty Metal, all the stocks are trading above their 200-DMA. On a WoW comparison basis, the sectoral indices-Nifty Auto and Nifty FMCG have seen a substantial improvement as 13.33 per cent each of the constituents of the index surged above their 200-DMAs. Among the constituents of Nifty Media and Nifty Pharma, almost 10 per cent of each constituent of the indices have surged above their 200-DMA. The ratio of stocks moving above/below their 200-DMA of Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Metal, Nifty Private Bank, Nifty PSU Bank, and Nifty Realty indi-ces remained unchanged on a WoW comparison basis.

In line with our expectations, Nifty Metal and Pharma indices have continued their northward journey. Interestingly, it has been observed that the gap between the average closing price of Nifty Metal constituents and their 200-DMA has further widened by nearly 5 per cent. In the last five trading sessions, Nifty Private Bank and Nifty Bank had underperformed the benchmark indices. While on the flip side, Nifty PSU Bank and Nifty Auto have outperformed the benchmark indices. The difference between 200-DMA and Nifty PSU Bank con-stituents' average closing price has increased by nearly 7 per cent, which is a bullish sign. Interestingly, on Monday, Nifty Media index had surged above its 200-DMA, which is a bullish sign. The general observation is that when the index moves above or below its 200-DMA, the majority of stocks also fol-low the same trend. Hence, going ahead, we may witness some stock-specific action in the constituents of Nifty Media.

Indicator To Gauge Internal Strength :
This indicator helps us to gauge the internal strength of the market. Among Nifty 500 stocks, a higher number of stocks reaching 52-week highs and the lesser number of stocks hit-ting 52-week lows represent a bull market while the opposite, suggests a bear market. On a WoW comparison basis, the pre-vious week's average ratio of stocks marking a fresh 52-week high/low was 35:0 while in the current week, the average ratio is 49:0 where on average, 49 stocks touched new 52-week highs while on the flip side, not a single stock has hit a new 52-week low.

There are three key takeaways for the bulls from the last five days' movement in the index. To begin with the current week, on average, 49 stocks have marked fresh 52-week highs, which is the most-improved ratio since the first week of March. The second one is that, on Monday, from the con-stituents of Nifty 500, almost 55 stocks have marked a fresh 52-week high, which is the highest since March 04. The last one is that since the last 14 trading sessions, not a single stock has hit a new 52-week low. Considering all the above factors, we can conclude that the internal strength of the market has improved remarkably, and the bulls may continue to rule. 

(Closing price as of May 12, 2021)