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 a security. Almost 80 per cent of the stocks that constitute Nifty 50-the equity benchmark index are trading above their 200-DMAs while 20 per cent of the stocks are trading below their 200-DMAs. On a WoW comparison basis, we observed that 8 per cent of the stocks of Nifty have slipped below their 200-DMAs. In the last four trading sessions, Axis Bank, GAIL, Britannia, and Shree Cement have plunged below their 200-DMA.

Axis Bank has crossed below its 200-DMA after almost a year. On a WoW basis, Nifty is down by 117 points or 0.66 per cent. It gained some points on Friday but the last two trading sessions were aggressively sold, wiping off all the gains. Nifty is currently into a countertrend consolidation pattern and is currently at its support. Any closing below the zone of 17,870-17,850 will mean a breakdown and we may end up seeing the levels of 17,500 soon. Despite a consolidatory week by Nifty, we see that 8 per cent of the stocks closed below their 200-DMA. This clearly shows the weakness persisting in the stocks and any increase in this number will mean that more correction is due for Nifty 50 index. 

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 except Nifty Pharma are trading above their 200-DMA. Among the constituents of Nifty IT and Nifty Media, all the stocks are trading above their 200-DMA. On a WoW comparison basis, Nifty FMCG has witnessed the highest fall in the number of stocks closing below their 200-DMA as 13.33 per cent of its constituents have closed below the key indicator. The sectoral indices, i.e., Nifty Financial Services, Nifty Private Bank, and Nifty Realty have seen 10 per cent of their constituents closing below their 200-DMA, followed by Nifty Bank, where 8.33 per cent of the stocks plunged below their 200-DMAs. The ratio of stocks moving above/below their 200-DMA of Nifty IT, Nifty Media, Nifty Metal, Nifty Auto, and Nifty PSU Bank indices remained unchanged on a WoW comparison basis.

In the cur-rent week, the auto stocks have outperformed the benchmark indices. In the last five trading sessions, Nifty Auto has soared nearly 2 per cent and closed at its all-time high. Nifty Auto index is currently trading above its 200-DMA by nearly 15 per cent. The difference between the closing price of Nifty Auto index and its 200-DMA has surged significantly in the last five trading sessions, which is a bullish sign. The reason behind the outperformance of Nifty Auto is the availability of chips used in the manufacturing of vehicles. Nifty IT has soared 4.3 per cent since the low of November 11 and is currently above its 200-DMA by 23 per cent. On the other hand, Nifty Pharma has entered bearish territory as it closed below 200-DMA. It is generally observed that whenever a sector closes below its 200-DMA, most of its stocks follow a similar pattern and witness a sharp fall. We can expect the same in pharma stocks. 

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 40:1 and in the current week, the average ratio is 28:3 where, on average, 28 stocks touched a new 52-week high. On the flip side, on average, only three stocks have hit a new 52-week low. On a WoW basis, Nifty 500 index ended 66 points down or 0.4 per cent. Nifty 500 tried to gain some momentum but was dragged down in the previous two trading sessions.

During this consolidation, we faced disappointment as on average, 28 stocks have marked a fresh 52-week high in the current week as against 40 stocks in the previous week. Also, we see an increase in the stocks hitting 52-week low as on average, three stocks hit their 52-week low as against one stock in the previous week. Along with this, we have seen weakness in the stocks marking a 52-week low on Monday and Wednesday as 5 stocks have marked a 52-week low. This number is the high-est since August 24 where we observed a similar number. This clearly indicates that the internal strength of the market has weakened when compared to the previous week and a further decrease in the stocks hitting a 52-week high would eventually worsen the situation