INSUBCONTINENT EXCLUSIVE:
The recent pullback rally in the domestic equity market had brought the benchmark NSE Nifty index above its 200-day moving average (DMA),
indicating that the index is gaining momentum.
On a month-to-date basis, the 50-share index has surged 3.45 per cent to close at 10,564 on
April 20 from 10,211 on April 2.
In the broader market, as many as 827 stocks, which account nearly half of the stocks listed on NSE, are
trading above their 200-day moving averages (DMAs).
Among individual stocks, Asian Hotels, Atul, Bajaj Electricals, Bandhan Bank, Bata
India, Berger Paints, Bhansali Engineering, Bharat Bijlee, Britannia, Butterfly Gandhimathi, Crisil, Dilip Buildcon, Finolex Cables,
IndusInd Bank, Infosys, JSPL, Kaya, Reliance Industries, V-Mart, Voltas and Zydus Wellness are now trading above their respective 200 DMAs
When a stock trades above all these DMAs, it is supposed to signal an upward trend
They provide useful information about support and resistance points.
Sacchitanand Uttekar, AVP-Technical (Equity), Tradebulls Securities,
said one of the basic technical indicators is the 200 DMA (simple moving average of 200 days past data), which can be used to determine
long-term trend of a security.
A stock trading below 200 DMA signals a weak trend while one trading above this level signals a strong
trend.
The 200-day moving average, also known as long-term moving average, acts as a crucial support for an index or a stock, while the
100-day average reflects a six-month timeframe and the 50-day average measures a quarter
A 20-day average measures a month and a 10-day average that of two weeks.
However, analysts caution market participants to not use moving
There are various other methods in which averages and their combinations can be utilised to gauge the strength and likely shift in trading
momentum.
Other indicators such as Relative Strength Index (RSI), Bollinger Bands, Fibonacci Series, MACD, candlestick patterns and
stochastic can also be used to confirm such trends.
Crossover method is very popular among short-term or momentum traders, in which they use
a combination of two or more averages to gauge the shift and intensity of momentum
The combination crossover usually highlights the force which could amplify the degree of momentum in a particular direction, Uttekar
said.
Stocks like Usha Martin, V2 Retail, United Spirits, TVS Motor, The Byke Hospitality, Star Cement, SORIL Holdings, Ramkrishna Forgings
were seen trading above their 200-DMAs on Friday
The broader market may witness some consolidation ahead of the expiry of current derivatives series on Thursday, said Milan Vaishnav,
The market is still not completely done with the consolidation and some minor corrective moves should not come as a surprise
The 10,610 and 10,690 levels should act as key resistance for Nifty in the coming weeks, while supports should come in at 10,580 and 10,375
