Strong rally lifts half of Nifty500 stocks above key long-term trend indicator

Mumbai: The strong momentum in the market over the last few weeks has pulled more than half of the stocks on the broader NSE 500 index above their 200-day moving averages (DMA) - a technical indicator signalling long-term trends. About 248 stocks or nearly 50% of the Nifty500 index traded above 200-DMAs on Wednesday, the highest in the last four months, suggesting there is room for more upside amid intermittent corrections, said analysts.

In June, when the market sentiment was weak, 15% of stocks were trading above the 200-DMA. In July, 25% of the stocks were above this long-term trend indicator.

"I think, clearly the sentiment along with liquidity and fundamentals are supportive for a long-term rally though there will be speed breakers and volatility," said Devang Mehta, head-equity advisory, Centrum Wealth.


"With the festive season in India about the start , revenge shopping, eating out, and revenge travel, many consumption-oriented sectors would find favour. With credit growth and capex returning, BFSI would also be a beneficiary."

About 59 of the NSE500 stocks are currently trading 20% above their 200 DMA. Heavyweights such as ITC, Adani Enterprises, Mahindra & Mahindra, HUL, ICICI Bank, Maruti Suzuki, Bajaj Auto, and Bajaj Finance, Asian Paints, Coal India, among others, are trading 10% above their respective 200 DMAs. Among the Nifty 50 stocks, 70% are trading above 200 DMA.

Top IT stocks such as TCS, Infosys, Wipro, Tech Mahindra, and HCL Tech are trading below their 200 DMA.

When an index or a stock trades above the 200 DMA, it points to a bullish trend and vice versa. The 200 DMA signifies a stock's trend over the past year. A year has roughly 200 trading sessions.

Nifty has rallied 18% from June 17and is just 3.6% away from the all-time high.