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 long-term trend of a security. Almost eight per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while, 92 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, there is no significant development that was seen as the ratio remains unchanged since the last five trading sessions. The majority part of March month was dominated by bears as on-an-average, ratio of stocks trading above/below their 200-DMA is 13:87, where on an average, 13 per cent stocks are trading above their 200DMA and on an average, 87 per cent stocks are trading below their 200-DMA.

In the month of February, we saw the ratio of stocks trading above/below their 200-DMA stood at 49:51, where on an average, 49 per cent stocks are trading above their 200-DMA and on an average, 51 per cent stocks are trading below their 200-DMA. And in the current month, the average ratio is 13:87, so on MoM comparison basis, we have observed that on an average, almost 36 per cent stocks have managed to close below their 200-DMA in the month of March. However, if we look at the last five trading sessions’ data, no significant development has been made in this ratio. This clearly depicts a consolidation or a breather phase witnessed in the last five trading sessions after a fierce sell-off.

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 lackluster one and not much action has been seen and this is clearly visible in the sectoral sentiment indicators as all the sectors remain unchanged on a WoW comparison basis. Considering the current structure of sectoral sentiment indicator, all the constituents of almost seven sectors out of 11, are trading below their 200-DMA. The financial sector is truly in pain as among the constituents of Nifty Bank, Nifty Financial Services and Nifty Private Bank, all the stocks are trading below their 200-DMA since the last three weeks while, almost 91.6 per cent stocks of Nifty PSU Bank index are trading below their 200-DMA.

With this, Nifty PSU Bank and Private bank are trading below their 200-DMA by 45.73 per cent and 37.31 per cent, respectively while, Nifty Bank and Nifty Financial Services are trading below their 200-DMA by 34.84 per cent and 29.94 per cent, respectively. Among the constituents of Nifty FMCG, almost 86.66 per cent stocks are trading below their 200-DMA and last week, the stocks were trading below their 200-DMAs by an average of about 21.28 per cent but in the current week, we have seen the average rebound by 7.25 per cent. Among the constituents of Nifty Pharma index, last week, the stocks were trading below their 200-DMAs by an average of about 17.76 per cent but in the current week, we have seen the average rebound by 6.35 per cent. The current structure of Nifty FMCG and Nifty Pharma looks interesting as the indices are trading at just 8.39 per cent and 9.04 per cent, respectively 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 lesser 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 0:205 and in the current week, the average ratio is 1:37 where, on an average, one stock touched new 52-week highs while, 37 stocks hit new 52-week lows. This is the most improved average weekly ratio in the month of March 2020. From the low of March 24, 2019, Nifty 500 has gained almost 845 points or 13.73 per cent and along with this upward move, we have seen a significant decline in stocks making new 52-week low. This clearly suggests that the internal strength of the market has been marginally improved as compared to the last four weeks as the stocks are not participating in the stocks making 52-week lows in large numbers, as seen in the last four weeks ratio is 13:87, so on MoM comparison basis, we have observed that on an average, almost 36 per cent stocks have managed to close below their 200-DMA in the month of March.

However, if we look at the last five trading sessions’ data, no significant development has been made in this ratio. This clearly depicts a consolidation or a breather phase witnessed in the last five trading sessions after a fierce sell-off. of about 21.28 per cent but in the current week, we have seen the average rebound by 7.25 per cent. Among the constituents of Nifty Pharma index, last week, the stocks were trading below their 200-DMAs by an average of about 17.76 per cent but in the current week, we have seen the average rebound by 6.35 per cent. The current structure of Nifty FMCG and Nifty Pharma looks interesting as the indices are trading at just 8.39 per cent and 9.04 per cent, respectively below its 200-DMA However, in the coming sessions, we have to watch whether this marginal improvement in the ratio was due to a pullback or we are nearing a bottom on a short-term basis.

*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 Mar 31, 2020)