More than 280 of the BSE 500 stocks are trading above their 200-day moving average (DMA), at present, against 254 as of September last year and 151 of them are trading 10 percent above their 200 DMA, a report by Business Standard stated.
The 200-DMA — nearly a year’s average of closing prices — is analysed by traders to understand the market sentiment. A fall below these levels indicates a weak trend, noted the report. Meanwhile, the Sensex and Nifty50 are trading 6 and 5.7 percent above their 200-DMA.
As per the market daily, the current trend reveals that gains are a bit more broad-based but nothing to write home about, considering the indices are near their all-time highs.
"At these levels, it should be much more. Ninety-seven percent of the top 500 stocks were above 200 DMA when indices hit their highs in October 2021. A little over half of BSE 500 trading above 200 DMA is a little on the lower side. Ideally, anywhere between 65-75 percent of the stocks should be trading above 200 DMA," Deepak Jasani, head of retail research, HDFC Securities.
"It gives an indication that a small set of stocks are still pulling up the indices with the broader market languishing. That's why cash volumes are also languishing," Jasani added.
Value buying is also attributed as one of the reasons for the gain in some of the stocks trading above their long-term average prices, noted BS.
The stocks trading well above their 200 DMA also reveal which sectors and stocks are in favour at the moment, said BS. Many public sector undertakings (PSUs) and PSU banks are trading above their 200-DMA. UCO Bank is trading 130 percent above its 200 DMA. Mazagon Dock, Punjab & Sind Bank and Rail Vikas Nigam are trading 80 percent above the mark.
Meanwhile, stocks like FSN E-Commerce Ventures, Gland Pharma, and Brightcom are trading 30 percent or more below their 200 DMA, added BS.