There are roughly 200 trading days in a year after deducting holidays and weekends so basically it gives a yearly trend.
Almost 60 per cent of the BSE 500 stocks are trading below 200-day moving averages amid the rout in global markets as the coronavirus scare has spread to several countries around the world. The Nifty is also trading below its 200-DMA and experts warned that more stocks could fall into a bearish trend if the panic selling because of the virus scare continues.
Since 200-DMA is a long-term average, it is considered a major support level for an index or stock. There are roughly 200 trading days in a year after deducting holidays and weekends so basically it gives a yearly trend.
PSU banks, NBFCs and select telecom companies are among the stocks which are trading furthest from their 200-DMA levels. Reliance Capital, Indian Bank, Vodafone Idea, and PNB Housing Finance are 40-82 per cent away from their 200-DMAs. These stocks are trading the furthest from their long-term averages.
“If the market continues to trade below 200-DMA, then more stocks will have a tendency to fall below 200-DMAs. The market will be in a semi-bearish phase till it trades below 200-DMA,” said Piyush Garg, CIO, ICICI Securities.
