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 96 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 4 per cent of the stocks are trad-ing below their 200-DMAs. In the last five trading sessions, Nifty index has witnessed 224.25 points or nearly 1.5 per cent upward move. Despite that, the ratio of stocks trading above/below its 200-DMA has remained unchanged on a WoW com-parison basis.
On Tuesday, among the constituents of Nifty index, almost 98 per cent of the stocks were trading above their 200-DMA. However, on Wednesday, the index witnessed a fall of over 1 per cent from its all-time high level and along with this fall, almost 2 per cent of the stocks slipped below their 200-DMA. On Wednesday, the index had closed below its prior trading session’s low for the first time after almost 13 trading sessions. Further, the momentum indicators are in an overbought zone. This indicates that the bulls are losing their control and bears have put their foot in the door.
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 Media, Nifty Metal and Nifty PSU Bank, all the stocks were trading above their 200-DMA. In the last five trading sessions, the benchmark index, Nifty was trading in a narrow range of 233 points. This is clearly visible in this indicator as all the sectoral indices remained unchanged on a WoW comparison basis. On Wednesday, the index has wit-nessed profit booking from higher levels and all the sectoral indices ended in the red. In the last five trading sessions, Nifty Realty and Nifty FMCG indices outperformed the bench-mark indices while Nifty Bank and Nifty PSU Bank indices underperformed the benchmark indices. From the high of 2,527.15, Nifty PSU Bank index slipped nearly 4 per cent while from the high of 35,810.90, Nifty Bank index plunged nearly 3 per cent.
The difference between 200-DMA and Nifty Bank constituents’ average closing price has narrowed by over 4 per cent in the last five trading sessions, which indicates a bearish momentum. In the last five trading sessions, Nifty Realty index had gained over 3 per cent while currently, it is trading above its 200-DMA by nearly 20 per cent, which indicates bullish momentum. Further, the difference between 200-DMA and Nifty Realty constituents’ average closing price has surged nearly 4 per cent in the last five trading sessions. Along with Nifty Realty, Nifty FMCG has also witnessed a bullish momentum as the index gained nearly 2 per cent in the last five trading sessions. On Tuesday, Nifty FMCG index has surged above its prior all-time high of 35,442.85 levels. Further, the difference between 200-DMA and Nifty FMCG constituents’ average closing price has surged nearly 3 per cent in the last five trading sessions. Currently, Nifty FMCG index is trading above its 200-DMA by nearly 9 per cent and a majority of the constituents of the index were trading above their 200-DMA. Hence, we may witness a further bullish momentum in Nifty FMCG index constituents.
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 hit-ting 52-week lows represent a bull market while the opposite, suggests a bear market. On a WoW comparison basis, the pre-vious week's average ratio of stocks marking a fresh 52-week high/low was 33:0 while in the current week, the average ratio is 59:0 where, on an average, 59 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 witnessed over 2 per cent upward momentum. On Wednesday, the index had marked a fresh all-time high of 13,569.75 levels.
This upward journey was not only quanti-tative in nature but also qualitative as on a WoW comparison basis, we have seen nearly 180 per cent improvement in stocks marking a new 52-week high. A major improvement was seen in the last three trading sessions as from Nifty 500 space, on average, 67 stocks have marked a fresh 52-week high in the last three trading sessions, which is the highest from the first week of March. Further, the current week's ratio of stocks marking a new 52-week high was the highest since the last 14 weeks. This clearly indicates that the internal strength of the market has improved remarkably in the current week. However, on Wednesday, the index has witnessed a correction of nearly 1.30 per cent from its all-time high level. Also, the index has formed a sizeable bearish candle on Wednesday, which indicates that the index may slide into a consolidation but we believe that the stock-specific action is likely to continue.
(Closing price as of June 09, 2021)