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 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. On a WoW comparison basis, we observed that 6 per cent of the stocks have managed to close below their 200-DMAs. In the last four trading sessions, Bharti Airtel, Coal India, Hero MotoCorp, Maruti Suzuki India and Reliance industries have slipped below their crucial 200-DMA while on the flip side, Britannia Industries and Nestle India surged above their 200-DMA.

On March 25, 2021, Nifty index has tumbled below the prior swing low and marked the low of 14,264.40. At that time, the internal strength of Nifty has weakened because almost 18 per cent of the constituents of the index were trading below their 200-DMA level. On March 25, among the constituents of Nifty index, 82 per cent stocks were trading above their 200-DMA, which was the lowest since the last 85 trading sessions (November 18, 2020). However, from the low of 14,264.40, the index has recovered almost 426 points or 2.98 per cent. Along with this pullback rally, almost 6 per cent of the stocks have surged above their 200-DMA. In the coming days, we have to watch whether this marginal advancement in stocks moving above their 200-DMA was due to a pullback or we are nearing a bottom on a short-term basis.

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. On a WoW comparison basis, the sectoral index-Nifty FMCG has seen a notable improvement as 20 per cent of the constituents of the index have surged above their 200-DMAs, followed by Nifty Pharma by 10 per cent. On the flip side, Nifty Auto index has seen remarkable weakness as 13.34 per cent constituents of the index have tumbled below their 200-DMA, followed by Nifty Media index by 11.11 per cent. Among the constituents of Nifty Realty index, in the last four trading sessions, almost 10 per cent of the stocks have plunged below their crucial 200-DMA level.

On March 25, 2021, Nifty Media index slipped below its crucial 200-DMA for the first time since November 05, 2021. This is clearly visible in this indicator as Nifty Media index has witnessed an addition in stocks moving below their 200-DMA for the third consecutive week. In Nifty Media index, on a cumulative basis, almost 44.44 per cent of the constituents have managed to close below their 200-DMAs in the last three weeks. In the last four trading sessions, Nifty Metal index has outperformed the benchmark indices as it has gained nearly 7 per cent. Along with this northward journey in Nifty Metal index, the average difference between 200-DMA and the close of stock has also surged by nearly 5 per cent, which indicates a further bullish momentum

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 previous week's average ratio of stocks marking fresh 52-week high/low was 11:0 while in the current week, the average ratio is 15:1 where, on an average, 15 stocks touched a new 52-week high while on the flip side, only one stock has hit a new 52-week low. In the month of March 2021, Nifty 500 index has gained 1.08 per cent. During the month, the index has marked an all-time high of 12,816.15 on March 12, 2021. Thereafter, the index has witnessed a correction of nearly 7 per cent in just 10 trading sessions. Due to this correction, we have seen a noteworthy drop in the stocks marking a 52-week high in the second half of the month.

Further, on a MoM comparison basis, nearly 41 per cent drop was seen in average stocks marking a fresh 52-week high from Nifty 500 universe. In the month of February, on average, 49 constituents of Nifty 500 have marked a fresh 52-week high. While in the month of March, on average, only 29 stocks have marked fresh 52-week high from Nifty 500 space. This indicates that on MoM basis, the internal strength has deteriorated. However, the current week’s formation of the indicator portrays a contradictory picture due to the pullback in the last two trading sessions. On a WoW comparison basis, we have seen an increment in the stocks marking a fresh 52-week high. From March 25 to March 26, on average, six stocks have marked a new 52-week high. However, in the last two trading sessions, we have seen remarkable improvement as on average, almost 24 stocks have marked a fresh 52-week high. This clearly suggests that the internal strength of the market has improved significantly in the last two trading sessions.

(Closing price as of Mar 31 2021)