Sensex rallies 40% from March low, but 2 in 3 stks miss the bus

Mumbai: The Sensex and Nifty have rebounded 40 per cent from their four-year lows in March, erasing majority of the losses in the past three-and-a half months, but beneath the surface, the sentiment remains grim. Out of the BSE 500 index stocks, 63 per cent are still below 200-Day Moving Average (DMA) — a long-term trend indicator, suggesting the equity market bounce has been driven by a smaller set of stocks.When an index or a stock trades below its 200-DMA, it is said to be in a long-term downtrend and vice versa. A fall below this technical level means a new buyer of the index or stock is willing to pay less than the average price paid in the last 200 consecutive days.Out of the Sensex’s 30 constituents that are also part of the BSE 500 index, 20 stocks are trading below the 200-DMA.“A large part of the gains in the benchmark itself have been because of Reliance, which has gone up by over 100 per cent from the bottom (March low),” said Abhimanyu Sofat, head of research at IIFL Securities. “Ex-Reliance, the index itself has not changed much and stocks in the broader market have also fallen sharply this year.” 76761348Blue chips that are above 200-DMA include RIL, Bharti Airtel, Sun Pharmaceutical, Nestle India, M&M, TCS, Infosys, HCL Technologies, HUL and Bajaj Auto.S&P BSE 500, S&P BSE Sensex and S&P BSE MidCap index are all 3 per cent below their 200-DMA levels.The BSE 500 index has gone up by 40.3 per cent, from 2020 low of Rs 7,864.01. Yet, most stocks are below their 200-DMAs. Some analysts believe the trend of only 37 per cent stocks being above 200-DMA is the result of prolonged weakness in the broader market.“There has been a two-year underperformance. They have also been correcting for some time. They have gone up sharply in recent weeks, but it is unlikely they will manage to hit their peaks seen in 2017 anytime soon,” said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.

from Economic Times https://ift.tt/3isQVNs