Sentiment Indicators

200-DMA INDICATOR: This indicator is a measure of the percentage of Nifty 50 stocks that are trading above/below their 200-day simple moving averages. The 200-DMA is considered as an important and one of the basic technical indicators that can be used to determine long-term trend of a security. Almost 72 per cent stocks that constitute the Nifty 50 are trading below their 200-DMAs, while 28 per cent stocks are trading above their 200-DMAs. In the last five trading sessions, Titan and Ultratech Cement have managed to close below their 200-DMAs. The fight between bulls and bears continues since the beginning of the month and this has resulted in the index trading on a subdued note amidst rising volatility. The indicator clearly mirrors the rangebound movement of the index which has been on display in the past five trading sessions, as on a w-o-w comparison basis, only 4 per cent stocks have managed to close below their 200DMAs and if we look at the chart, since August 8, 2019, no significant development was seen in the ratio. One interesting observation is that for the last 23 trading sessions, the ratio is in the favour of the bears, which is highest during CY2019. Going ahead, considering the majority of stocks and index itself is trading below their 200-DMAs, traders should adopt a 'sell on rise' strategy in the market in view of the ongoing weakness. 



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 of the sectors are improving their performances. The week had been a lacklustre one as not much action was seen and this was clearly visible in the sectoral sentiment indicators as almost eight sectors remain unchanged on a week-on-week comparison basis. On a w-o-w comparison basis, the sectoral index Nifty FMCG has seen substantial decline as 13.33 per cent stocks have managed to close below their 200-DMAs, followed by Nifty Realty whose 10 per cent components closed below their 200-DMAs. On the flip side, among the constituents of Nifty Financial Services, almost 5 per cent stocks have managed to close above their 200-DMAs. Nifty Auto, Nifty Bank, Nifty IT, Nifty Media, Nifty Metal, Nifty Pharma, Nifty Private Bank and Nifty PSU bank indices remained unchanged on a w-o-w comparison. Among the constituents of Nifty Auto, Nifty Metal, Nifty Pharma and Nifty PSU Bank, all the stocks are trading below their 200-DMAs (almost average 21.16% below their 200-DMAs), while in the Nifty Media, more than 85 per cent stocks were seen trading below their 200-DMAs. In the coming weeks, it will be interesting to watch the behaviour of the abovementioned indices as the current structure looks extremely overstretched. It would be no surprise if the abovementioned indices stall their downward momentum and slide into a period of consolidation. 



Indicator To Gauge Internal Strength : This indicator helps us to gauge the internal strength of the market. Among the Nifty 500 stocks, the increasing number of stocks reaching new 52-week highs and fewer stocks reaching new 52-week lows is representative of a bull market, and vice-versa being true of a bear market. On a w-on-w comparison basis, the previous week's ratio was 5:38 and, in the current week, the ratio was 6:44, where on an average six stocks touched new 52-week highs and 44 stocks hit 52-week lows. The ratio is in the favour of the bears for the seventh consecutive week, which is highest in CY2019. On August 14, August 16, August 19 and August 20, the average ratio was 6:37, where average six stocks had touched 52-week highs and 37 stocks had touched 52-week lows, but on Wednesday, we have seen significant addition in number of stocks making 52-week lows at 4:73, where an average four stocks had touched new 52-week highs and 73 stocks had touched new 52-week lows. This clearly suggests that the internal strength of markets con tinued to deteriorate and it got exaggerated on Wednesday due to the severe correction in the indices. 



 (Closing price as of Aug 21, 2019)