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 longterm trend of security. Almost 34 per cent of the stocks that constitute Nifty 50-the equity benchmark index, are trading above their 200-DMAs while 66 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 4 per cent of the stocks have managed to close above their 200-DMAs. In the last five trading sessions, Bajaj Auto and Wipro have managed to close above its 200-DMA. For the first time since March 2019, Wipro has managed to close above its 200-DMA.

From the low of June 25, 2020, Nifty index has witnessed almost 699.25 points or 6.86 per cent upward momentum. However, the indicator did not mirror the strength, which is showed by the index in the last 15 trading sessions as the ratio of stocks trading above/below its 200-DMA is oscillating in a defined range. This indicates that the current upward move started from the low of 10,194.50 is led by some selected heavyweight counters. The major participation was seen from IT stocks as Infosys witnessed over 22 per cent upward momentum from the low of June 25, 2020, followed by TCS by 14.60. Along with the IT stocks, the index bellwether-Reliance Industries Limited (RIL) has also witnessed almost 15.18 per cent upward momentum from the low of June 25, 2020.

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. Among all the sectoral indices, Nifty FMCG, Nifty IT and Nifty Pharma are trading above their crucial 200-DMA. On a WoW comparison basis, the sectoral index Nifty PSU Bank has seen a substantial decline as almost 23 per cent stocks have managed to close below their 200-DMAs, followed by Nifty Realty by 10 per cent. Among Nifty FMCG and Nifty Metal, about 6.66 per cent each of the stock constituents have moved below their 200-DMA. Nifty Financial services index saw a minor dip in the stock, as the stock is trading above its 200-DMA fell to 10 per cent from 15 per cent last week.

While on the flip side, among the constituents of Nifty IT, almost 10 per cent stocks have managed to close above their 200-DMAs, followed by Nifty Auto by 6.66 per cent. Nifty Bank, Nifty Media, Nifty Pharma and Nifty Private Bank indices remain unchanged on a WoW comparison. Nifty IT is consistently witnessing a new addition in stocks, which are trading above their 200-DMAs for the last three weeks. In Nifty IT Index, on a cumulative basis, almost 50 per cent con stituents have managed to close above their 200-DMAs in the last three weeks. With this, Nifty IT index has witnessed almost 1,878.40 points or 12.88 per cent upside in the last three weeks and currently, the index is trading above its 200-DMA by 10.84 per cent. For the first time after May, Nifty PSU Bank index has seen a substantial decline in the current week. On a WoW comparison basis, last week, the stocks were trading below their 200-DMAs by an average of 13.47 per cent but in the current week, we have seen a further correction in the stocks by on an average of 6.06 per cent.

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 12:1 and in the current week, the average ratio is 11:1 where, on average, 11 stocks touched a new 52-week high while on the flip side, one stock hit a new 52-week low.

Nifty 500 index has lost 95.15 points or 1.08 per cent in the last five trading sessions. Further, out of the five trading sessions, the index ended in red in three of them. On Tuesday, Nifty 500 index has given a consolidation range (8,761.95-8,901.30) breakdown on the lower side and despite that, we have not seen any significant changes in the ratio of stocks making new 52-week high/low.This clearly suggests that the index is currently witnessing consolidation with a negative bias and its stock-specific action may continue. Going ahead, if we have seen a further downside in the index with a decline in stocks making new 52-week high; it would raise the risk of a meaningful correction. 
 (Closing price as of July 15, 2020)