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. In the last five trading sessions, the stock of Bharti Airtel has again surged above its 200-DMA while the stock of Nestle India has slipped below its 200-DMA. Nifty index broke the broader range on March 12 on the upside, but it did not sustain at higher levels and witnessed a correction.

The index is oscillating in the range of 15,336.30-14,638.55 since the last 12 trading sessions. This is clearly visible in this indicator as the ratio of stocks moving above or below its 200-DMA has remained unchanged for the third consecutive week. Due to the narrow range, the difference between 200-DMA and index closing has been narrowed for the second consecutive week. Cumulatively, the difference is narrowed by 10.58 per cent in the last two weeks. Currently, the index is trading above its 200-DMA by 18.11 per cent. Among the constituents of Nifty index, the stock of Bharti Airtel, Cipla, Hindustan Unilever, Maruti, and Reliance Industries are the weak candidates as they are trading above their 200-DMA by less than 2.5 per cent. While on the flip side, the stock of Tata Motors, Hindalco, and Grasim are trading above their 200-DMA by more than 35 per cent. 

Sectoral Sentiment Indicator :
This indicator basically interprets the number of stocks in the sectoral indices that are trading above/below their 200-day moving averages. This will help us to know which sectors are improving their performance. Currently, all the sectoral indices are trading above their 200-DMA. Among the constituents of Nifty Auto, Nifty Bank, 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 Media has seen a notable weakness as over 22 per cent of the constituents of the index have slipped below their 200-DMAs, followed by Nifty Pharma index by 20 per cent. Among the constituents of Nifty FMCG index, almost 6.66 per cent of the stocks have slipped below their 200-DMA. Nifty Financial Services index has seen a minor weakness in the stock, as 5 per cent of the stocks slipped below their 200-DMA.

The ratio of stocks moving above/below their 200-DMA of Nifty Auto, Nifty Bank, Nifty IT, Nifty Metal, Nifty Private Bank, Nifty PSU Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis. In the last five trading sessions, the banking and the financial sector have underperformed the benchmark indices. While on the flip side, Nifty IT index has outperformed benchmark indices. Nifty IT index has gained nearly 2.34 per cent and currently, it is trading below its prior all-time high by just 3.65 per cent. The difference between 200-DMA and the close of Nifty IT index has also increased in the last five trading sessions, which indicates bullish momentum. The current structure of Nifty Pharma index looks weak as it is trading above its 200-DMA by just 1.18 per cent. Among the constituents of Nifty Pharma index, almost 50 per cent of the stocks are trading below their 200-DMA including Aurobindo Pharma, Biocon, Dr Reddy’s Laboratories, Alkem Laboratories, and Torrent Pharm

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 basis, the previous week's average ratio was 43:0 while in the current week, the average ratio is 23:0 where, on an average, 23 stocks touched new 52-week highs while on the flip side, not a single stock has hit a new 52-week low. On March 03, 2021, Nifty 500 index marked an all-time high of 12,781.85 and at the same time, almost 78 constituents of the index marked their fresh 52-week highs. However, on March 12, the index has surpassed its prior high and registered a fresh all-time high of 12,816.15 level.

However, this time, the picture is different as only 31 stocks from Nifty 500 universe have marked a fresh 52-week high on March 12. This indicates limited upside. In line with the expectations, from the high of 12,816.15, Nifty 500 index has corrected nearly 500 points or 3.87 per cent. The current structure of indicator is suggesting more weakness ahead. In the last five trading sessions, on average, only 23 constituents of Nifty 500 index have marked a new 52-week high, which is the lowest weekly average since December 2020. Further, on Wednesday, from Nifty 500 space, only 15 stocks have marked a fresh 52-week high, which is the lowest since February 01, 2021. This indicates that in the current week, the internal strength of the market has weakened significantly

(Closing price as of Mar 17, 2021)