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 24 per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while, 76 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, no significant development was seen as the ratio remains unchanged. In the last five trading sessions, the stocks of Hero MotoCorp and Mahindra & Mahindra have closed above their 200-DMA while on the flip side, the stocks of Bharti Infratel and Tata Consultancy Services have managed to close below their 200DMA.

For the first time since February 07, 2020, Mahindra & Mahindra has managed to close above its 200-DMA. Nifty index has lost almost 235 points or 2.32 per cent in the last five trading sessions. Despite that, the ratio of stocks trading above/ below its 200-DMA, remained unchanged as few stocks have managed to close above its 200-DMA while, some have managed to close below its 200-DMA. This clearly suggests that the index is witnessing a consolidation but picking and dumping of individual stocks is underway.

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 IT has seen a decline as 10 per cent of the stocks have managed to close below their 200-DMAs, followed by Nifty FMCG and Nifty Metal by 6.66 per cent each. On the flip side, among the constituents of Nifty Auto, almost 13.33 per cent of the stocks have managed to close above their 200DMAs. Nifty Bank, Nifty Financial Services, Nifty Media, Nifty Pharma, Nifty Private Bank, Nifty PSU Bank and Nifty Realty remained unchanged on a WoW comparison. Nifty Auto is consistently witnessing new addition in stocks, which are trading above their 200-DMAs since the last two weeks. In Nifty Auto Index, on a cumulative basis, almost 26.66 per cent constituents have managed to close above their 200-DMAs in the last two weeks.

Among the constituents of Nifty Media index, three week ago, the stocks were trading below their 200DMAs by an average of about 26.05 per cent but in the last three weeks, we have seen an average rebound of 21.87 per cent. With this, Nifty Media index has also seen a bounce of almost 17.61 per cent in the last three weeks and currently, the index is trading below its 200-DMA by 16.21 per cent. Among the constituents of Nifty Realty index, all the stocks were trading below their 200-DMA since the last 15 weeks and even in the last week, the stocks were trading below its 200-DMAs by an average of 25.49 per cent. However, in the current week, we have seen a further correction in the stocks by on an average of 2.68 per cent. In the coming weeks, Nifty Pharma index may be an attention-seeker because the index is consolidating in a range and there is no significant development, i.e. no addition or drop was seen in the ratio since the last seven weeks.

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 6:0 and in the current week, the average ratio is 9:0 where, on an average, nine stocks touched new 52-week high while on the flip side, not a single stock hit new 52-week lows. Nifty 500 has lost almost 152.90 points or 1.84 per cent in the last five trading sessions.

Despite that, we have not seen any addition in the new 52-week low. Also, the current average weekly ratio of the stocks making new 52-week high/low stood at 9:0, which is the most-improved ratio since February 2020. With this, on June 14, 2020, we have seen that almost 14 stocks have marked new 52-week high, which is the highest since February 25, 2020. This clearly indicates that the investors are utilising dips to buy quality stocks.
(Closing price as of June 17, 2020)