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 92 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 8 per cent of the stocks are trad-ing below their 200-DMAs. In the last five trading sessions, Zee Entertainment Enterprises has surged above its crucial 200-DMA. On a WoW comparison basis, we observed that 2 per cent of the stocks have surged above their 200-DMAs. The benchmark index-Nifty has gained almost 670 points or nearly 5 per cent from month-to-date. Along with this northward journey, the difference between 200-DMA and the index's closing price has also increased, which indicates bullish momentum.
On April 30, 2021, the difference between 200-DMA and the index's closing was 11.97 per cent while cur-rently, it is 14.22 per cent. There are two interesting observa-tions, firstly, for the last 162 trading sessions, the ratio of stocks trading above/below their 200-DMA is in the favour of bulls, which is the highest since February 2019. And the second one is that the index is trading above its 200-DMA since the last 213 trading sessions, which is the highest since February 2018. During the year 2017-2018, the index was trading above its 200-DMA for 291 trading sessions. Considering all the above facts and the current structure of the indicators, it's advisable for the traders to adopt a buy-on-dips strategy.
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 IT, Nifty Metal, and Nifty PSU Bank, all the stocks were trading above their 200-DMA. On a WoW comparison basis, the sectoral index-Nifty Media index has seen a notable improvement for the third consecutive week as 10 per cent of the constituents of the index have surged above their 200-DMAs. In Nifty Media index, on a cumulative basis, almost 30 per cent of the constituents have managed to close above their 200-DMAs in the last three weeks. The difference between 200-DMA and Nifty Media constituents' average closing price has increased by almost 11 per cent. Along with Nifty Media, Nifty PSU Bank has also seen a minor improvement as nearly 8 per cent of the constituents of the index has surged above their crucial 200-DMAs.
Currently, all the constituents of Nifty PSU Bank index are trading above their 200-DMA. The ratio of stocks moving above/below their 200-DMA of Nifty Auto, Nifty Bank, Nifty Financial Services, Nifty IT, Nifty Metal, Nifty Pharma, Nifty Private Bank, and Nifty Realty indices remained unchanged on a WoW comparison basis. Nifty Metal has continued its underperformance for the second consecutive week as the index has lost almost 5 per cent in the last five trading sessions. The difference between 200-DMA and Nifty Metal constituents' average closing price has narrowed by almost 10 per cent in the last five trading ses-sions, which indicates a bearish momentum. From the high of 5,524.25, which was registered on May 11, 2021, Nifty Metal index has lost almost 9.40 per cent. Currently, Nifty Metal index is trading above its 200-DMA by nearly 52 per cent. In the last five trading sessions, Nifty Realty index has outper-formed the benchmark indices. The difference between the 200-DMA and Nifty Realty index's closing price has increased by nearly 7 per cent, which is a bullish sign.
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, sug-gests a bear market. On a WoW comparison basis, the previous week's average ratio of stocks marking a fresh 52-week high/low was 37:0 while in the current week, the average ratio is 38:0, where on average, 38 stocks touched a new 52-week high while on the flip side, not a single stock has hit a new 52-week low.
Nifty 500 has gained almost 660 points or 5.32 per cent from month-to-date and during this month, the index has marked an all-time high almost five times. This is reflected well in this indicator as on an MoM comparison basis, we have seen nearly 171 per cent improvement in the stocks marking a 52-week high. In the month of April, on average, 24 constit-uents of Nifty 500 has marked a fresh 52-week high. While in the month of May, on average, 41 stocks have marked a fresh 52-week high from Nifty 500 space, which is the highest since February 2021. Going ahead, considering the significant additions in the stocks making 52-week highs as compared to its prior month & week, it clearly indicates that the bulls may continue to dominate.
(Closing price as of May 26, 2021)