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 a security. Almost 62 per cent of the stocks that constitute Nifty 50 equity benchmark index are trading above their 200-DMAs while 38 per cent of the stocks are trading below the 200-DMA. On a weekly basis, we observed that 10 per cent of the stocks of Nifty have surged above their 200-DMA. In the last five trading sessions, Axis Bank, Bajaj Auto, Grasim, ICICI Bank, and Zee Entertainment have soared above their 200-DMA while none of the Nifty stocks fell below the 200-DMA.

This week, Nifty gained about 252.60 points or 1.46 per cent. Throughout the week, the benchmark index traded with huge volatility and made swings in both directions. On Monday, it breached its last week low of 17006.30, and even breached the 200-DMA indica- tor. However, it recovered sharply from the 17000-level and gained about 300-odd points. Thus, the 200-DMA remains an important indicator to watch for. Following this move, the index inched higher and closed just below 17500-mark on Wednesday. Interestingly, the index closed above its previous week’s high. Currently, the difference between the index close and 200-DMA stands at 2.56 per cent, which was 1.30 per cent last week. Thus, with an increase in the number of stocks surging above the key indicator, we found that the index rose on a WoW basis. Going into next week, any increase in the number of stocks surging above their key indicator would be further met with positivity.

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. Most of the sectoral indices displayed a strong performance this week. Nifty IT, Nifty Media, Nifty PSU Bank, and Nifty Metal continue to trade above their 200-DMA with Nifty Realty being the latest entry to this list. On a WoW comparison basis, Nifty Private Bank saw a maximum of about 20 per cent of its constituents surg- ing above their 200-DMA. Nifty Bank saw this number to be at 16.67 per cent. It was followed by Nifty Metal and Nifty Auto, which saw about 13.33 per cent of their constituents rising above the key indicator. Also, Nifty Financial Services and Nifty Realty saw about 10 per cent of their constituents surging above the key indicator.

However, Nifty FMCG saw about a 6.67 per cent decline in its constituents below the key indicator. Meanwhile, Nifty Media, Nifty IT, Nifty Pharma, and Nifty PSU Bank saw no change in their constituents cross- ing above/below the key indicator. Nifty Media, undoubtedly, was the star performer for the week. The index rose by about 7 per cent this week. Following a strong gap-up last Thursday, the index continued its upmove during the week. It trades above all the key moving averages and is likely to be in focus for the next week as well. Nifty FMCG, on the other hand, has underperformed the other indices in the past many weeks. On a WoW basis, the index is almost flat and shows no sign of bullishness. The index is well below its 200-DMA and hence, it is likely to be traded with caution for the next week.

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 average ratio of stocks marking a fresh 52-week high/low last week was 12:4 while this week, the ratio stood at 18:11, where, on average, eighteen stocks touched a new 52-week high. On the flip side, on average, eleven stocks have hit a new 52-week low. Since last Wednesday’s close, Nifty 500 index has gained about 201.75 points or 1.37 per cent. During the week, the broader index continued to trade in a range-bound manner amid vol- atility as it did during the last week.

It came very close to its last week’s low of 14,492.25 but recovered sharply thereafter. Following the recovery, the index inched higher and closed above its broader range at 14,896.90. The volatility was reflect- ed in the index and an increase has been witnessed in the num- ber of stocks hitting both their 52-week high as well as low during the week. On Monday, the number of stocks hitting their 52-week low was the highest in recent days, which was found to be 18 while on Wednesday, the 52-week high number was found to be 23. Thus, with both the numbers increasing, the index is in a tough spot and could go either way from now on. Any significant increase in any of the numbers of 52-week high/low, followed by the declining number on the other, shall decide the further trend of the index. 

(Closing price as of Mar 30, 2022)