Sentiment Indicators
200-DMA INDICATOR :
This indicator measures the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving averag-es. 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 trad-ing 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 2 per cent of the stocks of Nifty have surged above their 200-DMAs. In the last five trading sessions, Bajaj Auto has surged above its 200-DMA while Nifty index gained 515.75 points or nearly 3 per cent during the same time peri-od.
On Monday, the index surged above its psychological level of 18,000 mark while on Wednesday, the index had marked a fresh all-time high of 18,197.80 level. Tata Motors became the current week's showstopper as it gained over 50 per cent in the last five trading sessions. Currently, the stock is trading above its 200-DMA by 66.13 per cent. Along with Tata Motors, Titan Company has also gained 18.13 per cent in the last five trading sessions. Currently, the index is trading above its 200-DMA by nearly 17 per cent. Interestingly, the index is trading above its 200-DMA since the last 309 trading sessions, which is the highest since April 2015. Considering the current struc-ture of the indicator, there is no sign of weakness. This upward journey in the index is backed by broader-based participation; hence, the bulls may continue to dominate.
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 IT and Nifty Media, all the stocks are trading above their 200-DMA. The current week has been undoubtedly dominated by the bulls and it is clearly reflected in the sec-toral sentiment indicator, with the bulk of the components of the sectors closing above their 200-DMAs. To begin with, on a WoW comparison basis, as many as 27 per cent of the stock components of Nifty Auto have surged above their 200-DMAs, followed by Nifty PSU Bank, where 15.38 per cent of the constituents surged above their 200-DMAs. Among Nifty Private Bank and Nifty Bank, about 10 per cent and 8.33 per cent, respectively of the stock constituents had moved above their 200-DMA.
Among the constituents of Nifty Metal, near-ly 7 per cent of the stocks have surged above their 200-DMA. Nifty Financial Services index has seen a minor improvement as the stock trading above its 200-DMA surged to 95 per cent from 90 per cent last week. The ratio of stocks moving above/below their 200-DMA of Nifty FMCG, Nifty IT, Nifty Media, Nifty Pharma, and Nifty Realty indices remained unchanged on a WoW comparison basis. In the last five trading sessions, Nifty Auto index has gained 12.32 per cent. In the current week, the difference between 200-DMA and the closing of Nifty Auto index has increased significantly, which is a bullish sign. Last week, the difference between 200-DMA and the closing of Nifty Auto index was 3.73 per cent while currently, the difference is nearly 16 per cent. Along with Nifty Auto index, Nifty PSU Bank index has also gained over 7 per cent in the last five trading sessions. Currently, Nifty PSU Bank index is trading above its 200-DMA by nearly 15 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, 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 36:0 and in the current week, the average ratio is 51:0 where, on average, 51 stocks touched a new 52-week high. On the flip side, on average, not a single stock has hit a new 52-week low. Last Wednesday, Nifty 500 index had formed a bearish engulfing candlestick pattern on the daily chart but the follow-up selling was completely missing.
This resulted in a sharp upward momentum index. In the last five trading ses-sions, the index has gained nearly 500 points or 3.28 per cent. The index had marked a fresh all-time high of 15,660.20 level on Wednesday. This upward movement was not only quanti-tative in nature but also, qualitative as on a WoW comparison basis, we have seen 42 per cent improvement in the stocks marking a fresh 52-week high. Further, on Wednesday, from Nifty 500 space, almost 67 stocks have marked new 52-week highs, which is the highest since the last 86 trading sessions. This clearly indicates that the internal strength of the market has improved significantly. Hence, traders should adopt the buy-on-dips strategy.
(Closing price as of Oct 13, 2021)