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 longterm trend of a security. Almost 92 per cent of the stocks that constitute Nifty 50, the equity benchmark index are trading above their 200-DMAs while only 8 per cent of the stocks are trading below their 200-DMAs. In the last five trading sessions, Indian Oil Corporation Ltd has managed to close above its 200-DMA. The month of November was a historic one as Nifty witnessed a gain of almost 1,300 points or 11.4 per cent. It has been the best month after April 2020. Along with this upward journey, we have seen a substantial improvement in the stock moving above their 200-DMA on an MoM basis. In the month of October 2020, on an average, 63 per cent of the stocks were trading above its 200-DMA, while in the month of November 2020, on an average, 83 per cent of the stocks were trading above its 200-DMA.

Considering the close of October 31, the stocks of Nifty index, on an average, were trading above its 200-DMA by nearly 4 per cent, and currently, on an average, they are trading above its 200-DMA by 17.60 per cent. This clearly suggests that the index is witnessing a broad-based participation rally. Going ahead, currently, the index is trading above its 200-DMA since the last 97 trading sessions, which is the highest in CY20 and almost 92 per cent of the constituents are also trading above its crucial 200-DMA. Hence, traders should adopt a buy-on-dips strategy.

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 Auto, Nifty Bank, Nifty IT, Nifty Media, Nifty Pharma, and Nifty Private Bank index, all the stocks were trading above their 200- DMA. On a WoW comparison basis, the sectoral index, Nifty PSU Bank has seen a substantial improvement as almost 33.33 per cent of the stocks have managed to close above their 200- DMAs, followed by Nifty Media by 22.23 per cent. Among the constituents of Nifty Bank index, almost 16.67 per cent of the stocks has surged above their crucial 200-DMA. Nifty FMCG 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. Nifty Auto, Nifty Financial Services, Nifty IT, Nifty Metal, Nifty Pharma, Nifty Private Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis. In line with our expectations, Nifty PSU Bank index has seen a substantial improvement in the second consecutive week as almost 30 per cent of constituents of the index have surged above its 200-DMA in the last two weeks.

Among the constituents of Nifty PSU Bank index, two weeks ago, the stocks were trading below their 200-DMAs by an average of about 3.11 per cent and in the last two weeks, we have seen the average bounce by 18.61 per cent. Nifty Media is consistently witnessing a new addition in stocks, which are trading above their 200-DMAs since the last two weeks. In Nifty Media Index, on a cumulative basis, nearly 33.34 per cent of constituents have managed to close above their 200-DMAs in the last two weeks. Among the constituents of Nifty Metal index, last week, the stocks were trading above their 200-DMAs by an average of about 24.10 per cent and in the current week, we have seen the average bounce by 10.76 per cent. Going ahead, the current structure of Nifty Metal and Nifty Realty sector is looks interesting as the momentum is tilted in the favour of the bulls.

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 was 32:1 and in the current week, the average ratio is 35:0 where, on an average, 35 stocks touched new 52-week highs while on the flip side, not a single stock has hit a new 52-week low. In the last four trading sessions, Nifty 500 index has gained 184.10 points or 1.72 per cent.

This is clearly visible in this indicator as on average, almost 35 stocks hit 52-week highs, which is the highest since January 2020. With this, on the first trading session of December month, almost 48 stocks have marked a new 52-week high, which is the highest since January 17, 2020. Nifty 500 index has formed a bearish engulfing candlestick pattern as of November 25, 2020, but the follow-up selling was completely missing. On November 25, 2020, only 22 stocks marked new 52-week highs. In the last two trading sessions, the index has negated the bearish engulfing pattern and surged above the high of November 25, 2020. With this upward move, on average, 41 stocks have marked the new 52-week high. This clearly indicates that the bulls are in no mood to give up and may continue to dominate.