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 security. Almost 94 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 6 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 below their 200-DMAs. In the last five trading ses-sions, Nestle India and Hindustan Unilever have managed to close below its 200-DMA. From last Wednesday's close to this Wednesday, Nifty index has gained 102.40 points or 0.67 per cent. In the last five trading sessions, the index has traded in the range of 366 points.



There are two key takeaways from the last five trading sessions. The first one is, considering the close of February 10, the stocks of Nifty index, on average are trading above its 200-DMA by nearly 22.04 per cent and currently, on average, they are trading above its 200-DMA by 21.08 per cent. The second one is that on Wednesday, almost 4 per cent of the constituents of the index had slipped below their 200-DMA, which is the highest since January 27, 2021. This clearly indicates that the internal strength of the index has weakened in the last five trading sessions. However, in the coming session, we have to watch whether this increment in stocks moving below its 200-DMA is limited to the period of consolidations or a calm before the storm i.e. a pause before a fresh round of buying starts.

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 improv-ing their performance. Currently, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Private Bank, and Nifty PSU Bank index, all the stocks are trading above their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty FMCG has seen a substantial decline as 20 per cent of the constituents of the index have slipped below their 200-DMAs. Among the constituents of Nifty FMCG index, Britannia Industries, Nestle India, Hindustan Unilever and United Spirits are trading below their 200-DMA. From the high of 34,978.15, which was registered on February 08, 2021, Nifty FMCG index has lost 4.17 per cent in seven trading sessions.


Currently, Nifty FMCG index is trading above its 200-DMA by 7.55 per cent. Along with Nifty FMCG, Nifty Metal has seen a minor decline as the stock trading above its 200-DMA fell to 86.66 per cent from 93.33 per cent last week. On the flip side, among the constituents of Nifty Pharma, almost 10 per cent of the stocks have managed to close above their 200-DMAs, followed by Nifty PSU Bank (8.34 per cent). The ratio of the stocks moving above/below their 200-DMA of Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Media, Nifty Private Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis. From last Wednesday's close to this Wednesday, Nifty PSU Bank index has gained 9 per cent. Last week, on average, the stocks of Nifty PSU Bank index are trading above their 200-DMA by on an average of 37.19 per cent but in the cur-rent week, the average difference between 200-DMA and close of the stock has increased by 21.37 per cent. Currently, the constituents of Nifty PSU Bank index are trading above their 200-DMA by on an average of 58.56 per cent and the index itself is trading above its 200-DMA by 61.33 per cent. Going ahead, considering the current structure of indicator, Nifty PSU Bank index may outperform the benchmark indices while on the flip side, Nifty FMCG index is likely to underperform. 

Indicator To Gauge Internal Strength :
This indicator helps us to gauge the internal strength of the mar-ket. 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 basis, the previous week's average ratio was 57:0 while in the current week, the average ratio is 54:0 where, on average, 54 stocks touched a new 52-week high while on the flip side, not a single stock has hit a new 52-week low. In the last five trading sessions, Nifty 500 index has gained 145 points or 1.16 per cent.



Since the last Wednesday, the index has traded in a confined range of only 298 points. Meanwhile, the daily candles are mostly small body candles, which indicate that the index is witnessing consolidation. However, the indicator did not portray the same picture, because, on a WoW comparison basis, there were negligible changes in the stocks, marking a new 52-week high. Further, on Tuesday, almost 64 stocks from Nifty 500 space have marked a fresh 52-week high, which is the highest since February 08. This clearly indicates that the index is witnessing consolidation while individual stocks' picking & dumping are underway. 

Closing price as of Feb 17, 2021)