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 longterm trend of security. Almost 96 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while only 4 per cent of the stocks are trading below their 200-DMAs. In the last five trading sessions, Maruti Suzuki India and Reliance Industries have surged above their crucial 200-DMAs. The bellwether i.e. Reliance Industries has surged above its 200-DMA for the first time since March 2021 while Maruti Suzuki India soared above its 200-DMA after 43 trading sessions.
On a WoW comparison basis, we observed that 4 per cent of the stocks have surged above their 200-DMAs. In the last five trading sessions, Nifty index has gained nearly 275 points or 1.79 per cent. Along with this upward journey, we have seen an increment in stocks moving above 200-DMA. In this upward journey, a major contribution was seen from Reliance Industries as it has gained nearly 12 per cent in the last five trading sessions. Currently, among the constituents of Nifty 50, almost 48 stocks were trading above their 200-DMA while the index itself is trading above its 200-DMA by 15.36 per cent. Hence, considering the current structure of indicators, traders should continue with a positive bias and look for buying opportunities on intraday declines.
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 improving their performance. Currently, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty IT, Nifty Media, Nifty Metal and Nifty PSU Bank, all the stocks are trading above their 200-DMA. On a WoW comparison basis, the sectoral indices-Nifty Media and Nifty Private Bank have seen a substantial improvement as 10 per cent each of their constituents have surged above their 200- DMAs. Among the constituents of Nifty Bank, almost 8.33 per cent of the stocks have moved above their 200-DMA on a WoW comparison basis.
Nifty Auto index has seen a minor improvement in the stock, as the stock trading above its 200- DMA surged to 86.66 per cent from 80 per cent last week. The ratio of stocks moving above/below their 200-DMA of Nifty Financial Services, Nifty FMCG, Nifty IT, Nifty Metal, Nifty Pharma, Nifty PSU Bank and Nifty Realty indices remained unchanged on a WoW comparison basis. On May 10, 2021, Nifty Media index has surged above its 200-DMA and since then, consistently, we are seeing addition in stocks moving above their 200-DMA from Nifty Media universe. On a cumulative basis, among the constituents of Nifty Media index, almost 40 per cent of the constituents have managed to close above their 200-DMAs in the last four weeks. In the coming weeks, Nifty Pharma can be the centre of attraction as the index is consolidating in a range and there is no significant development, i.e. no addition or drop was seen in the ratio of stocks moving above/below their 200-DMA since the last three weeks
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 hitting 52-week lows represent a bull market while the opposite, suggests a bear market. On a WoW comparison basis, the previous week's average ratio of stocks, marking a fresh 52-week high/low was 38:0 while in the current week, the average ratio is 33:0 where, on an average, 33 stocks touched new 52-week highs. On the other hand, not a single stock has hit a new 52-week low. In the last five trading sessions, Nifty 500 index has gained over 250 points or nearly 2 per cent and out of five trading sessions, the index has marked an all-time high in four of them.
However, the indicator did not portray the same picture as in the last four trading sessions as we have witnessed a drop in the stocks making a 52-week high. Further, if we look at the chart, since May 10, 2021, the number of stocks marking a 52-week high is in a declining trajectory while the index is in a rising mode. On May 10, 2021, from Nifty 500 space, almost 55 stocks have marked 52-week highs. From the close of May 10, 2021, to Wednesday’s close, Nifty 500 has gained nearly 5 per cent but on Wednesday, only 33 stocks have marked a fresh 52-week high. This clearly suggests that in the current upward rally, the stocks are not participating and only selective counters are seeing buying interest. This kind of divergence is often an early sign of market correction but it needs to be confirmed by price.
(Closing price as of June 02, 2021)