Sentiment Indicator

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 a security. Almost 14 per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while, 86 per cent of the stocks are trading below their 200-DMAs. In the last three trading sessions, Asian Paints had managed to close above their 200-DMA. On a WoW comparison basis, we observed that only two per cent of the stocks have managed to close above their 200-DMAs.

Since the last Wednesday, Nifty index has witnessed almost 512.45 points or 5.85 per cent upward momentum but the indicator did not mirror the strength which is showed by index in the last three trading sessions, as only two per cent of the stocks have man aged to close above its 200-DMA. Also, from the low of March 24, 2020, the index has gained almost 18.82 per cent, but if you look at the indicator, only 10 per cent of the stocks have managed to close above its 200-DMA. This clearly indicates that some oversold counters are reverting to their mean. 

 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. The week had been a lacklustre one and not much action has been seen and this is clearly visible in the sectoral sentiment indicators as almost nine sectors remain unchanged on a WoW comparison basis. Considering the current structure of the sectoral sentiment indicator, all the constituents of almost eight sectors out of 11, are trading below their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty Pharma has seen a substantial improvement as almost 20 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty FMCG by 6.67 per cent. Interestingly, on the flip side, not a single sectoral index has seen addition in stocks that have managed to close below their 200-DMAs. Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Media, Nifty Metal, Nifty Private Bank, Nifty PSU Bank and Nifty Realty indices remained unchanged on a WoW comparison.

Nifty Pharma is consistently witnessing new addition in stocks, which are trading above their 200-DMAs since the last two weeks. In Nifty Pharma Index, on a cumulative basis, almost 40 per cent constituents have managed to close above their 200-DMAs in the last two weeks. Among the constituents of Nifty Pharma index, two weeks ago, the stocks were trading below their 200DMAs by an average of about 11.41 per cent but in the last two weeks, we have seen an average rebound by 24.36 per cent and currently, the stocks were trading above their 200-DMAs by an average of about 12.95 per cent. Among the constituents of Nifty Metal index, last week, the stocks were trading below their 200-DMAs by an average of about 32.38 per cent but in the current week, we have seen the average rebound by 4.43 per cent. Among the constituents of Nifty FMCG index, 33.33 per cent of the stocks are trading above their 200-DMA and the index is trading just 0.19 per cent below its 200-DMA

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, the previous week's average ratio was 4:28 and in the current week, the average ratio is 7:5 where, on an average, seven stocks touched new 52-week highs while, five stocks hit new 52-week lows. This indicator clearly suggests that the week had been a lacklustre one and not much action has been seen. There are three key takeaways from the last three trading sessions. To begin with, on April 9, 2020, we have seen that the ratio of stocks hitting 52-week high/low turned into the favour of bulls for the first time after February 25, 2020. Following this, the average weekly ratio also turned into the favour of bulls for the first time after February 19, 2020.

And, as on April 09, 2020 we have seen the highest number of stocks making 52-week high since February 25, 2020. The pullback rally from the lower levels did help the markets to recoup some of its losses as Nifty 500 index has witnessed almost 23.24 per cent upward momentum from the low of March 24, 2020. But the indicator did not mirror the same strength showed by the index as despite the above given positive takeaways, we have not seen a significant addition in stocks making new 52-week high. This clearly suggests that the market participants are clearly lacking confidence and only selected counters are having buying interest.

*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 15, 2020)