On Friday, the Nifty ended below the 200-DMA, while the Nifty 500 index closed slightly above this key technical level.
Of the 492 stocks on the NSE 500 stocks with 200 DMA data available, 268 are now trading below it. Last week’s sell-off has had a bigger impact on the market trend than the weakness in the whole of October when less than 5% of the NSE 500 stocks traded below the 200-DMAs.
Among the 92 stocks with a market capitalisation over ₹1 lakh crore, 52 – including Reliance Industries, SBI, LIC, Hindustan Unilever, Bajaj Finance, Kotak Bank, Maruti Suzuki, and Axis Bank-have fallen below their 200-DMAs.
“The Nifty50 experienced a significant decline last week, resembling a bottomless pit, as it breached all key intermediate support levels, dampening market sentiments ahead of the Christmas and New Year festivities,” said Sameet Chavan, research head-technical & derivatives, Angel One.
“The advance-declines have strongly turned to favour bears, and it is advisable to avoid trying to catch the falling knife with bottom-fishing in mind.” Stocks like ICICI Prudential Life, Indian Bank, Alkem Laboratories, Ashok Leyland, Jindal Stainless, Balkrishna Industries, Deepak Nitrite, and Cholamandalam Financial Holdings among others fell below their 200-DMAs last week. Infosys, HCL Technologies, Wipro, Zomato, Trent, Vedanta, Tech Mahindra, Divi’s Laboratories, and Indian Hotels are still strong, trading 10% above their respective 200-DMAs. Technical analysts said a 20% drop below the 200-DMA signals a bearish trend, but a sharp decline below this technical level also signals oversold levels.
