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 60 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 40 per cent of the stocks are trading below their 200-DMAs. On a weekly basis, we observed that 10 per cent of the stocks of Nifty have plunged below their 200-DMA. In the last five trading sessions, Adani Ports, Indus Towers, Eicher Motors, HDFC Bank, and Kotak Mahindra Bank have slipped below their 200-DMA while none of the Nifty stocks surged above their moving average indicator. Nifty has been on a roller-coaster ride in the past few weeks.



Since last Wednesday’s close, it has slipped about 317 points or 1.78 per cent. In the previous week, the index gained about 914 points after losing 661 points a couple of weeks back. Thus, the short-term outlook looks pretty much unstable without any clear trend. This week, the benchmark index witnessed a sharp fall towards 17,000 from 17,800 in just four trading sessions. To every trader’s surprise, it was quite an unexpected and scary fall without any major bad global & local cues. However, the index managed to recover about 420 points from the week’s low of 17,043. The index made a huge swing in both directions throughout the week and remained choppy. Moreover, the uncertainty looms amid huge gap-ups and gap-downs. However, the long-term picture still remains bullish as Nifty is about 4.2 per cent above its 200-DMA. Moreover, the number of stocks falling below/ surging above their key indicator will further decide the market trend in the coming week. 

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. The sectoral indices displayed a weaker performance this week with most of the indices ending in red on a WoW basis. Nifty FMCG joined hands with Nifty Pharma and has slipped below its 200-DMA. On a WoW comparison basis, Nifty PSU Bank saw the greatest number of constituents (23.08 per cent) falling below their 200-DMA. It was followed by Nifty Financial Services and Nifty Private Bank, which saw about a 20 per cent fall each in their constituents falling below the key indicator. Nifty Bank and Nifty Auto saw about 16.67 per cent & 13.33 per cent of their constituents, respectively, fall below the 200-DMA.

Next in line are Nifty IT and Nifty Realty, which saw this number as negative 10 per cent. However, despite the weakness in the broader market, Nifty Metal saw about 20 per cent of its constituents surging above the key indicator. Indices like Nifty FMCG, Nifty Media and Nifty Pharma saw no change in their constituents crossing above/below the key indicator. In such a highly volatile market, Nifty Metal showed an incredible performance throughout the week by surging about 3.56 per cent since last Wednesday. With this, the index has taken out its prior swing high and looks bullish for the short term. Thus, the metal sector will be in good books among the traders for the next week. Meanwhile, the index, which remained weak throughout, was Nifty Realty. The index registered a fall of 5.65 per cent in the last five days. Selling pressure was reflected in the index as it formed four strong bearish candles during the week. The index would be watched with caution for the next week. A noteworthy point worth mentioning is that Nifty Private Bank and Nifty Financial Services managed to surge above their 200-DMA after slipping below it on Tuesday.

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 average ratio of stocks marking a fresh 52-week high/low last week was 7:4 while this week, the ratio stood at 8:5, where, on average, eight stocks touched a new 52-week high.

On the flip side, on average, about five stocks hit a new 52-week low. In the last five trading sessions, Nifty 500 index has lost about 277 points or 1.81 per cent. The index formed a higher low w.r.t the previous week. The index lost points in four out of five trading sessions. On Tuesday, the index registered the highest number of stocks falling below their 52-week low. Throughout the week, the number of stocks hitting the 52-week high/low looked distorted as none of them showed a clear picture. Any significant rise in the number of stocks hitting their 52-week high/low will decide the further trend of the market.