Sentiment Indicators

200-DMA INDICATOR: 

The 200-DMA is considered as an important and one of the basic technical indicators that can be used to determine the trend of a stock. Currently, almost 60 per cent stocks that constitute the Nifty are trading above their 200-DMAs, while the rest are trading below their 200-DMAs. In the last five trading sessions, Hindalco, SBIN and UPL have surged above their 200-DMAs while IOC and Powergrid dipped below their 200-DMAs, on a closing basis. From the low of October 09, the Nifty has gained almost 875.90 points or 7.31 per cent on continued optimism led by the corporate tax cut, better than expected corporate earnings, and favorable global cues. This is clearly reflected in the 200-DMA indicator as almost 18 per cent of the Nifty stocks have been trading above their 200- DMAs since October 09. On a month-on-month comparison, we observe that almost 12 per cent of the Nifty stocks closed the September month above their 200-DMAs. In the month of September, the average ratio of stocks trading above/below their 200-DMAs stood at 36:64. The commensurate ratio for the month of October stood at 48:52, which is the highest improvement since July 2019. However, if we look at the last five trading sessions' data, there has been no significant improvement in this ratio as on a w-o-w basis only 2 per cent stocks have managed to close above their 200-DMAs; this clearly depicts a consolidation or a breather phase witnessed in the last five trading sessions after a stupendous rally from the lows.

Sectoral Sentiment Indicator : 

This indicator basically flashes the number of stocks in individual sectoral indices trading above/below their 200-DMAs. This week, the market has continued with its winning streak as broad based buying interest in most of the sectors has helped the Sensex scale a fresh closing peak on Wednesday. This is clearly visible in the Sectoral Sentiment Indicator, with bulk of the stocks across sectors managing to close above their 200-DMAs. To begin with, on a w-o-w basis, as many as 13.34 per cent of the stocks forming the Nifty Auto index have managed to close above their 200-DMAs. The commensurate number for the Nifty Reality index is 10 per cent. For both, Nifty Bank and Nifty PSU Bank indices 8.33 per cent of the components surged above their crucial 200-DMA. The Nifty Metal index witnessed 6.66 per cent of its stocks surge above the crucial 200-DMA and the Nifty Financial Services index saw 5 per cent of its stocks close above the 200-DMA. On the flip side, among the constituents of Nifty IT, almost 10 per cent stocks slipped below their 200-DMAs. The Nifty FMCG, Nifty Media, Nifty Pharma and Nifty Private Bank indices remained unchanged w-o-w on this criteria. Despite weak auto sales numbers, buying interest in Nifty Auto stocks has continued in the current week also, as among its constituents, almost 40 per cent of the stocks have managed to close above their 200-DMAs in the last three weeks. The Nifty Bank index is consistently witnessing new addition in stocks which are trading above their 200-DMAs since the last two weeks. On a cumulative basis, almost 16.66 per cent of the constituents have managed to close above their 200-DMAs in the last two weeks. The Nifty Media index has been consolidating in a range and there was no significant development, i.e., no addition or drop was seen in the ratio since the last two weeks, but we have seen an average rebound of 3.83 per cent in the last two weeks.

Indicator To Gauge Internal Strength : 

This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, higher number of stocks reaching 52-week highs and lesser stocks hitting 52-week lows represents a bull market. The opposite suggests a bear market. On a w-o-w comparison, the previous week's ratio was 26:11 and, in the current week, the ratio is 21:5, where, on an average, 21 stocks touched new 52-week highs while five stocks hit new 52-week lows. In the last three trading sessions of October, the average ratio of stocks making new 52-week high/ new 52-week low stood at 34:8 where an average 34 stocks touched 52-week highs and 8 stocks touched 52-week lows. But in last four trading sessions, we have seen a decline in the number of stocks making new 52-week highs as the average ratio of last four trading sessions is 17:4. This clearly reflects a pause in the internal strength of the market. As compared to last week, stocks are not participating in large numbers on the upside as seen in the earlier week.