Most Nifty companies trading below 200 DMA, indicating a bearish trend

Two-thirds of the Nifty constituents are still trading below key long-term average levels, which indicates that the bearish trend in the market remains intact even as the market attempted to claw back some of the losses by rising for the third straight day on Tuesday. Thirty-three of the 50 Nifty stocks are trading below the 200-day moving average. This includes heavyweights such as Larsen & Toubro, Maruti Suzuki India, HDFC Bank, Housing Development Finance Corporation, and Kotak Mahindra Bank, data compiled by ETIG Database showed. The 200-DMA is a long-term average and is considered a major support level. There are roughly 200 trading days in a year after deducting holidays and weekends. So, essentially the 200-DMA gives a yearly trend.

Bajaj Auto, Hero MotoCorp, Indian Oil Corporation, Maruti Suzuki India, HPCL, Tata Motors and YES Bank are 10-41 below their 200-DMAs. The stocks which are above the 200-DMA level are mostly from the information technology and pharmaceutical space, which are considered defensive bets in a volatile market. “Most of the stocks have broken below the 200-day moving average which theoretically means we are in selling mode,” said Chandan Taparia, derivative analyst at Motilal Oswal. Taparia said a more bounce could be seen in the market in the short-term, but the market could resume sell-off again. “The medium-term trend is still in pressure till Nifty is below 10,850,” said Taparia.